EMPLOYERS HAVE MORE INCENTIVE TO GET IT RIGHT

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EMPLOYERS HAVE MORE INCENTIVE TO GET IT RIGHT

In the case of Naranjo v. Spectrum Security Services, Inc., the California Supreme Court just gave employers more incentive to ensure their employee compensation policies and practices, and employee paystubs are accurate and contain all of the required information.  In California, employers must pay an additional one-hour premium for missed meal and rest breaks.  Now, failure to document that premium and timely pay it subjects the employer to additional penalties.

Last year, the California Supreme Court held that employers may not round employee meal period time records (Donohue v. AMN Services, LLC) and subjects employers to meal period violations if the time record shows that the employee took even a 1 minute short meal break.  In 2021, Employers also got hit with a ruling (Ferra v Loews Hollywood Hotel, LLC), where the California Supreme Court held that when calculating meal and rest break premiums, the “regular rate of compensation” is the same formula as that used to calculate overtime payments (employee base hourly rate, plus nondiscretionary compensation like commissions and bonuses as the rate to calculate overtime) during the same pay period.

The Naranjo decision also now ensures that employers are subject to additional liability, like waiting time penalties for failure to timely pay compensation at the employee’s termination of employment.  Worse yet for employers, attorneys’ fees and costs are added to the sums due a prevailing employee suing for noncompliant wage statements and other violations.  Getting the premium payment wrong on the paystub subjects the employer to as much as $4,000 in wage statement penalties, plus up to 30 days of additional wages as waiting time penalties as premiums (penalties) for missed breaks that are not included in the final wages.  The Navaro case was a class action.

California employers should have:

  •      1. Written policies providing and permitting meal and rest breaks;
  •      2. Record when an employee’s break is short, late, or missed and documented whether it was voluntarily on the employee’s part, or because of employer interference with the break;
  •      3. Documented training of supervisors and employees to ensure the employer’s policies (including of documenting the breaks) are followed;
  •      4. Payment of premiums when required;
  •      5. Correct calculation of the “regular rate of pay” when paying premiums (and overtime);
  •      6. Accurate information on the employee paystubs; and
  •      7. Timely payment of premiums, including when an employee is terminated.

 

California employers should review and update meal and rest period policies and practices, ensure compliant breaks and documentation, calculation and payment of meal and rest break premiums, and accurate records to prove compliance with the employment laws.  If you have any questions, please 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 likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.

EPPS & COULSON, LLP
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