In May 2022, the California Supreme Court reversed the prior employer-friendly decision in Naranjo v. Spectrum Security Services, Inc. and held that meal and rest break premium pay is considered to be wages. This means that an employer’s failure to pay premium pay for non-compliant meal and rest breaks can trigger derivative claims for wage statement violations and waiting time penalties.
Under the California Labor Code, wage statement violations are penalized at $50 per employee for the initial pay period in which a violation occurs and $100 per employee for each violation in a subsequent pay period, up to a maximum of $4,000 per employee. Waiting time penalties apply if an employee is not paid all wages due at the time of separation from employment and can equal up to 30 days of pay at the employee’s regular rate of pay. The Naranjo decision highlights the importance of legally-compliant policies and procedures to avoid break violations in the first place.
The Naranjo case involved a class action brought by former and current security officers who worked for Spectrum Security Services (“Spectrum”), a private contractor for federal prisons and Immigrations and Customs Enforcement (ICE). Spectrum’s security officers are responsible for guarding prisoners, detainees and sometimes court witnesses. The security officers often spent their meal periods on duty, and claimed that they were unable to take uninterrupted 10-minute rest breaks due to the level of supervision they were required to maintain.
In 2019, the California Court of Appeal held that Spectrum’s security officers who were paid for on-duty meal periods also were entitled to one hour of premium pay for each on-duty meal period worked by the class members when they did not have a written agreement with a revocation provision. In what was a landmark employer-friendly decision at that time, the California Court of Appeal further held that violations of the Labor Code’s meal break provisions by themselves do not entitle employees to pursue derivative claims for improper wage statements and waiting time penalties.
The Court reasoned that even though premium pay has been classified as a “wage” for the purpose of the statute of limitations, the underlying harm does not arise from the nonpayment of wages. Rather, the harm arises from the failure of the employer to protect the health and welfare of their employees by providing code-compliant breaks. The Court of Appeal further held that because it did not consider the premium pay to be a “wage,” derivative claims that flow from the employer’s failure to pay wages do not apply.
Unfortunately, the California Supreme Court did not agree. It reasoned that the requirement for the payment of premium pay can be viewed both as a legal remedy and as wages. “That is because under the relevant statute and wage order, an employee becomes entitled to premium pay for missed or noncompliant meal and rest breaks precisely because she was required to work when she should have been relieved of duty: required to work too long into a shift without a meal break; required in whole or part to work through a break; or, as was the case here, required to remain on duty without an appropriate agreement in place authorizing on-duty meal breaks.” Accordingly, the premium pay for deprivation of a legally-compliant break is considered to be wages, similar to the premium required for overtime pay and split shifts.
According to the California Supreme Court, the failure to pay premium pay can trigger waiting time penalties as well as penalties for wage statement violations. Of course, the employee still must establish that the underlying conditions for issuing the penalties have been met. Specifically, the employee must first establish that there was a meal or rest break violation that would trigger premium pay. The employee also must show that the violation was “knowing and intentional” (as to wage statement violations) and/or “willful” (as to final pay at the time of separation from employment) for penalties to be triggered.
Employers can take several steps to protect themselves from liability in this area:
For questions regarding meal and rest breaks and employee compensation, or other employment law issues, contact the attorneys at LightGabler.