California Supreme Court Rules Missed Meal and Rest Break Premium Payments are to be Calculated using Hourly Rate Plus Non-Discretionary Payments
CALIFORNIA SUPREME COURT RULES MISSED MEAL AND REST BREAK PREMIUM PAYMENTS ARE TO BE CALCULATED USING HOURLY RATE PLUS NON-DISCRETIONARY PAYMENTS
California employers must provide employees with at least a 30 minute meal break at or by the 5 hour work period mark, as well as two 10 minute rest breaks during a normal 8 hour shift:
Meal Break Chart Rest Break Chart
If an employer does not provide non-exempt employees with compliant meal and rest periods, that employer is obligated to pay the employee one additional hour of pay per day for a missed meal break and another additional hour of pay for one or more missed rest breaks, but at what hourly rate?
Unfortunately, California Labor Code did not provide a clear answer when it stated that this missed meal or rest break “premium payment” is to be paid at the “regular rate of compensation.” Does this mean the same thing as “regular rate of pay”? The California Supreme Court recently answered this question in the case of Ferra v. Loews Hollywood Hotels, LLC and ruled that the regular rate of pay is calculated using hourly wages, plus any “nondiscretionary payments” for work performed by the employee, for example, bonuses or commissions. These nondiscretionary payments must be included in the employee’s compensation when determining the employee’s regular rate of pay for these premium payments. The California Supreme court also clarified that this Ferra decision is retroactive for any prior missed meal/rest break payments.
California employers would be wise to review their meal and rest break policies and practices and even their prior payments for missed meal and rest breaks to ensure that the payment calculation methodology is in line with the Ferra ruling. Importantly, in California, the statute of limitation for unpaid (or under paid) missed meal and rest break claims can typically go back four (4) years. This ruling surely will encourage class action litigation claims and other class-like claims against employers. So, now is the time to review these matters and fix any problems.
Here at Epps & Coulson, LLP, we understand that these updated changes may be confusing. To ensure that you understand the wage and hour rules that apply to your employees and your jurisdiction feel free to contact Dawn at: dcoulson@eppscoulson.com.
Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney. It is considered advertising under laws of some states. Epps & Coulson, LLP encourages you to call in order to discuss these matters as they apply to you or your business.
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