Meal Period Timekeeping – California Supreme Court says “No” to Rounding?

What Do California's New Time-Punch Rounding Policies Mean for You? - TEAM  Software

Source: Schneiders & Associates, LLP, by Ted Schneider, Esq.

Many employers use rounding to adjust an employee’s work hours to the nearest whole time increment, such as five or ten minutes. Employers beware! However, in a newly published decision, timekeeping rounding must not apply to meal periods.

California employers must provide employees with a 30-minute, uninterrupted meal period that begins no later than the end of the fifth hour of work. If an employee is not provided the timely and uninterrupted meal period, the employee is due one hour of premium pay.

In the case of Donohue v. AMN Services, LLC, the California Supreme Court ruled against an employer’s timekeeping practice of rounding meal period timeclock punches. The Court further held noncompliant meal periods results in a rebuttable presumption of liability against the employer at the summary judgment stage.

AMN used an electronic timekeeping system to track employees’ compensable time. Employees used their computers to punch in and out at the beginning and end of lunch. Employees could also ask to manually adjust any inaccurate time punches, such as forgetting to clock out for lunch. The computer system automatically rounded employee time punches to the nearest 10-minute increment.

The Supreme Court used the following example to illustrate how AMN recorded meal break punches:

“[I]f an employee clocked out for lunch at 11:02 a.m. and clocked in after lunch at 11:25 a.m., [AMN’s timekeeping software] would have recorded the time punches as 11:00 a.m. and 11:30 a.m. Although the actual meal period was 23 minutes, [AMN’s timekeeping software] would have recorded the meal period as 30 minutes.” Another example is if an employee clocked in for work at 6:59 a.m. and clocked out for lunch at 12:04 p.m., the system would record those time punches as 7:00 a.m. and 12:00 p.m. In this example, the employee would have begun their meal period after five hours and five minutes of work, but the timekeeping system would not have recorded that violation.

The California Supreme Court ruled that it is the employer’s responsibility to implement compliant meal period policies that allow employees to take the full, uninterrupted 30-minute meal period without reduction of any kind, including from neutral rounding timekeeping practices.

Further, an employer’s timekeeping policy must ensure that the employee being relieved from duty for a 30-minute meal period is accurately reflected in the employer’s time records.

Employers using rounding systems should consult with legal counsel before continuing such practice. If you have questions about your business’s rounding or timekeeping policies and procedures and would like to determine if your practices comply with the Supreme Court’s decision and applicable law, contact Schneiders & Associates, L.L.P. to speak with an employment law expert.

Supreme Court Weighs Employer’s Challenge To California Labor Law

Supreme Court weighs employer's challenge to California labor lawSource: Los Angeles Times, by David G. Savage

The Supreme Court on Wednesday weighed an employer’s challenge to a California labor law that authorizes private attorneys to sue on behalf of thousands of workers, even if those workers had agreed to arbitrate their claims individually.

The closely watched case is the latest and perhaps most important test of whether companies can shield themselves from costly employment lawsuits through arbitration clauses that forbid group or class claims.

The court’s conservative justices said little during Wednesday’s argument in Viking River Cruises vs. Moriana, while the three liberals spoke in defense of the California law.

“This is the state’s decision to enforce its own labor laws in a particular kind of way,” Justice Elena Kagan said.

She was referring to the Private Attorneys General Act of 2004, in which the Legislature authorized private attorneys to sue employers and collect penalties for violations of the labor code.

The state said it did not have enough staff to police industries where “labor law violations are the most rampant, including agriculture, garment, construction, car wash, and restaurants.”

The suits often cite complaints of wage theft or unpaid overtime work. Under the law, 75% of the penalties collected are to be returned to the state, while the remainder is divided among the employees and the attorneys.

A group of California employers told the court that the law, even if well intentioned, has become a means to enrich plaintiffs’ law firms. They file claims at a rate of 17 per day, said Washington attorney Paul Clement, and they are demanding penalties for “tens of thousands of employees at a time and extracting millions of dollars from employers.”

The issue for the court was whether the Federal Arbitration Act of 1925 preempts or trumps the California private-attorneys law.

For more than a decade, the high court has regularly sided with businesses and in favor of arbitration. The justices have ruled that businesses may enforce arbitration clauses that prevent workers or consumers from filing broad class-action claims.

The 1925 law was designed originally to uphold arbitration agreements between companies that had signed contracts to ship goods by railroad or by sea. More recently, it has been transformed into a powerful weapon for companies seeking protection from class-action claims.

But California and state courts have been holdouts, ruling that plaintiffs may sometimes join together to sue under state law. In 2014, the state Supreme Court said the Federal Arbitration Act did not prevent the state from authorizing private attorneys to enforce its labor laws.

The case before the court began when Angie Moriana quit her job as a sales agent in Los Angeles for Viking River Cruises and complained she did not receive her last paycheck. She became the lead plaintiff in a private suit alleging violations of behalf of a large group of Viking employees.

Viking asked a Los Angeles County Superior Court judge to block the lawsuit and send her case to arbitration. The company said she had agreed to arbitrate “any dispute arising out of or relating to your employment.” Moreover, she had waived any right to any “class, collective or private attorney general action.”

But the judge and a state appeals court refused and ruled that under California law, the private suit may proceed because “the state is the real party” bringing the claim. The state Supreme Court turned down an appeal, but in December, the U.S. Supreme Court agreed to hear Viking’s appeal.

“Arbitration will be gutted,” Clement argued, if states can authorize broad private lawsuits in its place.

But workers’ rights advocates said the private lawsuits are crucial for protecting employees. They cited a recent report by the UCLA Labor Center that found 89% of claims under the Private Attorneys General Act alleged wage theft.

Justice Brett M. Kavanaugh asked whether it was correct that “California is an outlier here.”

Yes, said Scott Nelson, an attorney for nonprofit consumer advocate Public Citizen. California wanted “to enhance its enforcement” of workers rights, he said. And that decision to authorize private suits “is entitled to respect, even if California remains the only state that does so.”

The court will hand down a decision in the case by late June.

LGBT Employees and Benefits: Impact of Marriage Equality

A year after the Supreme Court’s historic marriage equality ruling (Obergefell v. Hodges, June 2015), Lincoln Financial surveyed LGBT employees about their benefits. Since the ruling, 28% of the LGBT community overall, and 35% of those married or in a domestic partnership have reevaluated their workplace benefits, enrolled in a new benefit, or increased their contribution to an existing benefit. Thirty percent are making changes to their workplace benefits as a result of the ruling. But 50% are still unaware of how the ruling affects their benefits. Thirty-eight percent of LGBT employees who are married or in a domestic partnership are not aware how the marriage equality ruling affects their workplace benefits. The study also finds the following:

  • 14% of LGBT employees who are married or in a domestic partnership have enrolled in a new non-medical insurance plan.
  • 11% of LGBT employees have enrolled in a new health insurance plan.
  • 7% LGBT employees have made changes to their retirement plan by enrolling in a new plan or increasing contributions.
  • 51% of LGBT employees would like to speak with someone about their benefits.

For more information, visit http://newsroom.lfg.com/mood-of-america-special-report

Group Asks Supreme Court to Review Challenge to Employer Mandate

The Association of American Physicians and Surgeons (AAPS) is asking the Supreme Court review a case that challenges the ACA’s employer insurance mandate (Stephen F. Hotze, M.D., and Braidwood Management v. Sylvia Mathews Burwell and Jacob J. Lew). Employer, Braidwood Management, says that it was forced to purchase ACA-compliant insurance at inflated premiums to avoid a $100 per-day/per-individual tax (or penalty). Braidwood Management says that, because of the ACA’s coercive intrusion, it could no longer purchase the pre-ACA low-cost insurance with the options it preferred. The ACA reduced market choices, increased prices, and limited some features that Braidwood Management and its employees valued.

The AAPS says that the mandate is unconstitutional because the Constitution requires all revenue-raising bills to originate in the House of Representatives. AAPS executive director Jane M. Orient, M.D. said, “The ACA is basically the Harry Reid bill. The…ACA was drafted in the Majority Leader’s office, outside the usual committee process. The legislative process [was] reduced to backroom horse-trading to secure the moderate members of the majority caucus without inviting input from the Senate minority.

The Fifth Circuit dismissed the case, saying that the Anti-Injunction Act (AIA) does not allow businesses to bring pre-enforcement challenges to the employer mandate (tax). But attorney Lawrence Joseph argues that the Anti-injunction Act does not apply to regulatory taxes under the ACA, nor does it prohibit challenges to illegal or unconstitutional taxes. Moreover, employers like Braidwood Management have no post-enforcement remedies to recoup a tax they never paid. Finally, even without ruling on ACA’s tax penalties themselves (as taxes), a federal court would have jurisdiction to stop the ACA’s unconstitutional intrusion into the health-insurance marketplace. “Some may say that, after a couple of big setbacks to challengers in the Supreme Court, ACA is here to stay. But because of its sloppy drafting, frenzied enactment, and widespread destructive effects on freedom, the economy, and the practice of medicine, there will be legal challenges as long as it is in effect,” Orient added.

Hospitals Well Positioned for Insurer Consolidation

The for-profit hospital industry is well positioned to weather the wave of mergers and acquisitions (M&A) among the largest for-profit health insurers, but consolidation could have some important longer-term ramifications, according to Fitch Ratings.

M&A activity among health insurers is not likely to result in immediate price pressure for hospitals. In many markets, health insurers are already fairly consolidated. Recent actions by hospitals to build market presence will shore up negotiating power. However, it could hurt the competitiveness of smaller insurers in some markets. It could also accelerate the shift towards value-based payments for hospitals and other healthcare providers.

The merger of Aetna and Humana would create the second largest national for-profit health insurer by revenue. The announcement of the merger comes after some favorable developments for the hospital industry. Most importantly, the Supreme Court recently ruled that public health insurance exchange plans could keep the financial subsidies that make these plans more affordable. In part because of the ACA-related expansion of health insurance coverage, hospitals have recently had more patients. M&A activity among acute care hospitals has given them more negotiating clout. Hospitals have been expanding their presence in key geographies through acquisitions and financial partnerships

Reactions to Supreme Court Subsidy Ruling

The U.S. Supreme Court ruled that nationwide subsidies called for in the Affordable Care Act are legal. The following are reactions from stakeholders:

  • Patrick Burns, president of the California Association of Health Underwriters: The Supreme Court got it right. California has a state-based exchange (Covered California), so nothing will really change here, but the clarification was very important to residents in the 34 states that utilize the federally facilitated health insurance marketplace in some form…Our hope is that state and federal policymakers will now turn their attention on efforts to truly reduce the cost of providing health care, something that the ACA has not fully addressed. Lawmakers and regulators need to look at and improve the portions of our health care system that work well and keep a variety of health insurance product options available to all. The employer-based system has reliably and effectively delivered quality health coverage to generations of Americans. And we as a nation need to work to preserve it.
  • Covered California Executive Director Peter V. Lee: Although Covered California enrollees were not at risk of losing their subsidies as a result of the Supreme Court decision, a ruling invalidating subsidies offered through the federal health exchange could have resulted in changes to the federal law, which could have affected California…The subsidies have helped millions of Americans, including individuals I have met whose lives were saved as a result of the care they received. With the support of federal subsidies, the majority of consumers enrolled with Covered California pay less than $150 per month for their premiums, with many tens of thousands of consumers paying less than $10 per month for coverage.
  • California HealthCare Foundation president and CEO Dr. Sandra Hernández: We hope that this ruling will hasten the conclusion of the seemingly endless political debate about the law. After the ACA was enacted in 2010, California government and industry leaders had the foresight to swiftly establish Covered California. That was a wise decision not only because the exchange now has 1.3 million enrollees, but also because the state exchange insulated Californians from the financial and health risks posed by this legal challenge.
  • The American Academy of Actuaries Academy Senior Health Fellow Cori Uccello: The…ruling upholding…preserved an integral component of the Affordable Care Act and averted significant disruptions to the individual health insurance market. In the loss-of-subsidy scenario, adverse selection would have been a serious concern, as relatively higher-cost individuals would have retained coverage, increasing average costs and premiums. While the legal challenge to subsidies has been decided, the Academy urges policymakers to assess any proposals that may be offered to modify or replace the ACA against these important market reform principles.

CHIP renewal, court ruling affect coverage for nearly 2M children

An Urban Institute report predicts that 1.9 million children would lose coverage if Congress decides not to reauthorize the Children’s Health Insurance Program and if the Supreme Court rules against Affordable Care Act subsidies. “The combination of both policies would mean a lot of progress we’ve made over the last 20 years would be wiped out,” Urban Institute senior fellow Lisa Dubay said. The Hill (3/18), Modern Healthcare (tiered subscription model) (3/18)

Key Senate Republicans offer bridge if ACA tax credits fall

Consumers who enrolled in health insurance through HealthCare.gov would not immediately lose tax credits and subsidies if the Supreme Court rules against the Obama administration, Republican Sens. Orrin Hatch of Utah, John Barrasso of Wyoming and Lamar Alexander of Tennessee wrote in the Washington Post. “We would provide financial assistance to help Americans keep the coverage they picked for a transitional period,” the senators wrote. Bloomberg (3/1), The Washington Post (tiered subscription model) (3/1)

Alito hints at compromise ACA ruling

Supreme Court Associate Justice Samuel Alito on Wednesday hinted during arguments on Affordable Care Act tax credits that a ruling against the Obama administration might not immediately invalidate credits. Instead, the court might stay its own ruling to allow a transition phase during which consumers who used HealthCare.gov to enroll in a 2015 health insurance plan could keep their tax credits for the year. Bloomberg (3/4), Kaiser Health News (3/4)

ACA enrollment raises the stakes in Supreme Court case

About 8.6 million people in 37 states used HealthCare.gov to enroll in or renew a 2015 health insurance plan, and the majority of them would lose their premium subsidies if the Supreme Court rules that tax credits are available only through state-run exchanges. More than 85% of HealthCare.gov users qualified for a tax credit, HHS Secretary Sylvia Mathews Burwell said. The New York Times (tiered subscription model) (2/19)

Last Updated 05/25/2022

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