Recent decisions from California appellate courts and the Ninth Circuit Court of Appeals impact employers in the state in some key areas. Issues settled among the recent decisions include the method of assessing an employee’s compensation as it relates to calculating the overtime rate, the rounding of time punches as related to meal breaks, and Family Medical Leave Act (FMLA) leave claims for “rotational employees”.
Per Diem Benefits As Part Of Overtime Compensation
In the recent class action Clarke v. AMN Services, LLC, the Ninth Circuit considered whether per diem payments should be included as part of their regular wage rate when calculating overtime pay. Each week, the defendant healthcare staffing company, ANM, paid its traveling clinicians a per diem benefit when they were required to work more than 50 miles from their homes. The clinicians brought a class-action lawsuit against ANM, arguing that the company had wrongly excluded the per diem benefits from their regular rate of pay under Fair Labor Standards Act. This exclusion had the effect of decreasing their rate of pay for overtime work. The Ninth Circuit Court ruled that, since the per diem benefits operated to compensate the clinicians for their work, rather than to reimburse them for expenses that they incurred, like gas costs or other travel-related expenses, the benefits should have been included in the clinicians’ regular rate of pay when calculating overtime pay.
No Rounding Time On The Clock For Meal Breaks
While federal law and California case law have generally permitted employers to round punch-in and punch-out times, the California Supreme Court recently considered the issue of rounding time on the clock with regard to meal breaks specifically. In Donohue v. ANM Services, LLC, the company’s timekeeping system rounded its employees’ punch times to 10-minute increments. With that system, an employee who punched out for lunch at 12:32 PM (rounded back to 12:30 PM) and punched back in from lunch at 12:55 PM (rounded up to 1:00 PM) was documented to have taken a lunch break of 30 minutes, even though they really only had a 23-minute break. The Court said that, although rounding of time is generally regarded as a fair labor practice, rounding times clocked in and out for meal breaks is not permissible. Finding that “even relatively minor infringements on meal periods can
cause substantial burdens to the employee,” the Court pointed to “health and safety concerns” that are the reasons behind meal break requirements in federal and California law, and ruled that the practice of time rounding in that context would violate that purpose.
Weeks Already Off May Still Count As Workweeks Of Leave For FMLA
In Scalia v. State of Alaska, the Ninth Circuit Court of Appeals considered whether already-scheduled weeks off were to be counted as workweeks for leave under the federal Family and Medical Leave Act (FMLA). The FMLA allows eligible employees to take “12 workweeks of leave” for personal or familial medical issues. In this case, the U.S. Secretary of Labor argued that “rotational employees,” whose schedules consisted of one week of work followed by one week off, were entitled to 24 weeks off, as their already-scheduled “off weeks” should not be counted as “workweeks of leave” for purposes of FMLA leave. The Ninth Circuit disagreed, siding with the State of Alaska, and ruled that the “workweek” is not based on the individual employee’s work schedule, but rather is just a week-long period during which the employer is in operation. Therefore, the state workers are only entitled to 12 weeks of FMLA leave, even if they already would have had half of those weeks off due to their rotating shifts.
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