The California Supreme Court has issued a new decision adding two significant new requirements on employers in California when managing missed meal and rest break premium pay.
Taking a step back, as you already know, California law requires employees to be provided with a thirty minute uninterrupted meal break before the end of the fifth hour of work, and to the extent an employee does not get this, the employee must be provided with an additional hour of pay – "premium pay" or "extra pay." Likewise, employees are entitled to take a ten minute uninterrupted rest break for every four hours worked or major fraction thereof, and must be provided with an additional hour of premium pay if they are unable to take a required rest break.
In Naranjo v. Spectrum Security Services, Inc., a class action case having to do with the payment and reporting of missed meal breaks by security officers, the California Supreme Court rendered two significant rulings affecting virtually all private sector employers in the State. First, the Court held that meal and rest period premium pay constitutes “wages” under the law, because it compensates for work the employee performed during the break period that they did not get. From there, the Court concluded that because the premium pay constitutes wages, it must be reported on employee pay stubs. Further, because these payments are deemed “wages”, they must be timely paid in full whenever an employee leaves a job. As such, these payments are subject to so-called "waiting time penalties" – i.e., up to thirty (30) days of wages at the employee's daily rate of pay.
What this means for you:
Take a look at your employee wage statements! If you are not already specifically and accurately itemizing premium pay for missed meal or rest breaks on employee wage statements, you should start doing so now. If the data is omitted, employers now will run afoul of California Labor Code Section 226, which sets forth the requirement for employers to furnish accurate wage statements. Importantly, a violation of this requirement will subject the employer to class action liability and liability under California’s Private Attorney General Act (PAGA) for non-payment of “wages”.
Make sure you are paying premium pay whenever it is owed! Because departed employees may now collect waiting time penalties if they are owed any meal or rest break premium when they leave their employment, it is more important than ever to ensure that leaving employees are timely and fully paid all such premiums due. Under the waiting time pay statute (California Labor Code Section 203), employees that have not received all their wages when leaving (which now includes the meal and rest break premium pay) are entitled to a penalty equal to the amount of the employee's daily rate of pay for each day the wages remain unpaid, up to a maximum of 30 days.
To be sure, this new decision raises the stakes considerably for employers who do not scrupulously comply with these new requirements. Employers should consider implementing a robust tracking system to ensure that all meal and rest break are provided and that any meal/rest breaks penalties are timely paid.