Contract analysis

I. Issue Presented AMA Productions Inc. ("AMA") utilizes the "TimeTrack Pro" electronic timekeeping system, developed and administered by NovaPay Solutions Inc. ("NovaPay"), across its California production operations. A core feature of the TimeTrack Pro system is an automatic meal-period deduction function (the "auto-deduction"), which automatically deducts thirty (30) minutes from an employee's recorded hours for a

II. Background — System Implementation A. Transition to NovaPay Solutions and TimeTrack Pro Prior to January 1, 2019, AMA utilized a manual time-sheet system for tracking the hours worked by its non-exempt, hourly employees at its California production facilities. Under that system, employees recorded their start times, end times, and meal period times on paper time sheets, which were then reviewed and approved by su

1. Trigger Threshold: The auto-deduction is configured to deduct thirty (30) minutes from an employee's recorded hours for any shift of six (6) hours or more. The deduction is applied automatically by the system without any affirmative action by the employee or supervisor. It is important to note — and this constitutes an independent compliance issue analyzed in detail in Section V.D below — that this six-hour thresh

2. Timing of Deduction: The auto-deduction is applied at the sixth hour of the shift. Specifically, when an employee's cumulative shift time reaches six hours and zero minutes (6.0 hours), the system automatically deducts 0.5 hours (30 minutes) from the employee's total recorded hours for that shift. The deduction is applied to the back end of the payroll calculation and is reflected in the employee's pay stub as a r

3. Second Meal Period: The auto-deduction feature does NOT apply a second automatic deduction for shifts exceeding ten (10) hours. Under California Labor Code section 512(a) and Wage Order 12, a second meal period must be provided for shifts exceeding ten hours (unless waived in accordance with the statute). AMA's TimeTrack Pro system contains no automated mechanism for tracking, prompting, or deducting for second me

III. Key Findings — Inconsistent System Configuration and Usage Our preliminary review of information provided by AMA — principally through interviews with Lorraine Okafor, Senior Vice President of Human Resources, and Karen Fong, Payroll Manager — and from NovaPay Solutions has revealed several significant findings regarding the implementation of the TimeTrack Pro auto-deduction system and the Missed Meal Attestatio

IV. Legal Analysis — California Law on Auto-Deduction Practices A. Employer's Obligation Under *Brinker* The foundational California Supreme Court decision on employer meal period obligations is Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004. In Brinker, the Court held that an employer's obligation under California law is to "provide" meal and rest periods — that is, to make them available to emplo

V. Risk Assessment Overall Rating: HIGH RISK The auto-deduction practice, as implemented at AMA, presents significant litigation risk. We assess this risk as HIGH based on the cumulative effect of the factors identified below. Each factor independently contributes to AMA's exposure; taken together, they create a compounding risk profile that will be difficult to mitigate through litigation alone. A. Inconsistent Atte

VI. Exposure Estimate — Auto-Deduction-Related Claims Based on our preliminary analysis of the available information, we provide the following exposure estimate for the auto-deduction-related claims in Fuentes v. AMA Productions Inc.: Estimated Class Size: Approximately 1,850 non-exempt, hourly employees during the class period (November 1, 2018 to the present, representing a four-year statute of limitations for the

VII. Recommendations Based on the foregoing analysis, we recommend the following immediate and medium-term actions. A. Immediate Corrective Action — Attestation Feature Activation AMA should activate the Missed Meal Attestation feature at Facilities 2, 4, and 7 (Studio City, Burbank, and El Segundo) immediately. This is the single most urgent corrective action available to AMA and should be prioritized accordingly. I

1. Written Notice to All Non-Exempt Employees. AMA should distribute a written notice — in both English and Spanish, given the demographics of the workforce — to all non-exempt, hourly employees at all seven California facilities. The notice should clearly explain: (a) the employee's right to a thirty-minute duty-free meal period for shifts exceeding five hours and a second meal period for shifts exceeding ten hours;

2. Supervisor Training. AMA should conduct mandatory training sessions for all supervisors with responsibility for non-exempt employees, including unit production managers ("UPMs"), line producers, department heads, and other supervisory personnel across the fourteen show units. The training should cover: (a) the supervisor's obligation to ensure that employees are aware of the attestation feature; (b) the supervisor

3. Documentation. All training sessions — both employee notice distribution and supervisor training — should be documented with sign-in sheets, and all training records should be retained in AMA's human resources files. Documentation of training will be important for AMA's defense in the current litigation and for any future compliance disputes. D. Document Preservation AMA must ensure that all TimeTrack Pro configur

1. Economics/Damages Expert. We plan to retain Dr. Catherine Lindstrom of Hargrove Analytics Inc. (515 S. Figueroa Street, Suite 1100, Los Angeles, CA 90071) to analyze the actual impact of the auto-deduction practice on employee compensation. The key analytical question is: to what extent did the auto-deduction result in underpayment? Answering this question requires comparing auto-deducted meal periods with actual

2. Industrial/Organizational Expert. We separately recommend retaining Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC (444 Castro Street, Suite 800, Mountain View, CA 94041) to analyze the variability in meal and rest break practices across AMA's fourteen show units and seven facilities. Dr. Makhija's analysis will focus on whether the experiences of the named plaintiffs and their work environments are repre

VIII. Conclusion The auto-deduction practice as implemented across AMA's seven California production facilities presents HIGH litigation risk. This assessment is driven primarily by four interrelated factors:

1. The inconsistent activation of the Missed Meal Attestation feature, which left employees at three of seven facilities without any electronic mechanism for reporting missed meal periods for a period of nearly four years;

2. The absence of any documented employee training, written notice, or formal communication regarding the attestation feature, even at the facilities where the feature was activated;

3. The strikingly low usage rates (1.8%–4.1%) at the activated facilities, which — in the context of the training gap — support the inference that employees were unaware of or unable to use the feature; and

4. The misconfigured trigger threshold (6 hours rather than 5 hours), which constitutes an independent compliance violation and expands the universe of potentially affected shifts. These vulnerabilities are compounded by the practical realities of the entertainment production environment, in which cultural expectations and production pressures create inherent challenges for meal period compliance. We recommend that A