|
|
3220 M Street Telephone: (916) 492-6555 Facsimile: (916) 492-6556 ©2007 The Ison Law Group |
The Meal and Rest Time Premium is NOT a
Penalty
The
Instead
of 1 year, an employee can now reach back 3 years to recover for meal and rest
time violations. In addition, lifting the penalty classification has
unveiled the applicability of Business & Professions Code section 17200 to
meal and rest time violations. That section provides for class action
lawsuits and further provides a 4 year statute of limitations.
Given
the Murphy ruling, it is not enough for employers to simply implement a
meal and rest time policy that matches the Labor Code. To protect against
costly lawsuits, the employer must also require, enforce and document
compliance.
The Backdrop
Most employers are aware that failing to comply with
meal and rest time provisions may require the employer to pay an additional
hour of pay to the employee for each day that a violation occurred.
Specifically, Labor Code section 226.7 provides that:
[I]f an employer fails to provide an employee a meal period or rest
period in accordance with an applicable order of the Industrial Welfare
Commission, the employer shall pay the employee one additional hour of pay
at the employee’s regular rate of compensation for each work day that the meal
or rest period is not provided.
Unfortunately,
the “additional hour of pay” language of section 226.7 has been the source of
some confusion. The focus of the confusion is whether the additional pay
should be treated as wages or, instead, a penalty. Certainly, a literal
reading of this language allows the conclusion that additional wages are being
paid. An argument can therefore be made that the provision seeks to
reimburse the employee for breaks he/she was supposed to receive. On the
other hand, given that the meal time provision only requires a thirty (30)
minute period of time and required break times are only ten (10) minute periods
for every four (4) hours of work, the additional one (1) hour of pay required
under section 227.6 does not appear to reflect actual time worked. From
that perspective, the extra pay does not resemble wages, but rather a penalty.
Adding
to the confusion, the California Division of Labor Standards Enforcement (DLSE)
and the Courts have provided conflicting interpretations. In June 2003,
the DLSE took the position that the meal and rest break payments were a premium
wage and not a penalty. Later, the DLSE changed its position in June 2005
(Case Number 12-56901RB), stating that it is a penalty. In contrast, a
federal court, interpreting
Then,
in December 2005, the California Court of Appeal, First District, ruled on the
issue in Murphy v. Kenneth Cole Productions, Inc. (2005) 134 Cal.App.4th
728. The Murphy Court of Appeal explained,
That payment is not compensation for labor performed,
but is an arbitrary amount imposed on the employer in addition to the salary
already paid during the time the employee was not eating or not resting.
It is not overtime pay for an allowed work period, but a penalty for violating
the law that prohibits work during those times.
Reversing
the lower Court, The California Supreme Court now confirms that Labor Code
section 226.7 should not be read as imposing a penalty. Among other
reasons, the Court placed emphasis on the fact that the statute itself does not
classify the provision as a penalty, noting that the Legislature has made it
clear that it knows how to write penalty statutes with clarity. It also
points out that interpreting this as a premium wage is consistent with other
Labor Code conventions, such as overtime pay, which is not considered a penalty
but rather a wage. The Court also reasoned that pay is not transformed
into a penalty merely because a one-to-one ratio does not exist between the
economic injury caused by meal and rest period violations on the one hand and
the remedy selected by the Legislature on the other hand. Stated
differently, just because a one-hour premium is earned for a thirty (30) minute
violation does not mean that the premium paid is a penalty.
Why Is This Case
Significant To Employers
The significance of the
●
The statue of limitations for recovery of a penalty is
only one (1) year under C.C.P. § 340. The window of recovery for meal and
rest time period violations has therefore been significantly increased, given
that claims for unpaid wages are generally subject to a three (3) year statute
of limitations under C.C.P. § 338(a).
●
As a penalty, an employee could not seek to recover
this amount in an Unfair Business Practices Act lawsuit under Business &
Professions Code §17200. Section 17200 typically only allows monetary
recovery in the form of restitution (return of something lost). That rule
therefore applies to wages but not penalties. Now that Section 17200 is
viable, employers are exposed to the class action features of Section 17200 as
well as the four (4) year statute of limitations.
Summary
of Meal and Rest Time Requirements
Meal Periods
Each
Wage Order promulgated by the Industrial Welfare Commission (except Wage Order 16)
contains the same requirements for meal times. First, an employee who
works more than five (5) hours in a shift is entitled to a meal period of not
less than thirty (30) minutes. An exception exists if the work period is
not more than six (6) hours, in which case the meal period may be waived by
mutual consent of the employer and employee.
Unless
the employee is relieved of all duty during a thirty (30) minute meal period,
the meal period is considered an “on duty” meal and counted as time
worked. An “on duty” meal period is only permitted when the nature of the
work prevents an employee from being relieved of all duty and when by written
agreement an on-the-job meal period is agreed to. Such an agreement must
expressly provide that the agreement may be revoked at any time.
An
employer may not employ an employee for a work period of more than ten (10)
hours in a workday without providing a second meal period. The second
meal period may be waived if the total number of hours worked are no more than 12
hours and the first meal period has not been waived. (Labor
Code § 512; DLSE Enforcement Manual § 45.2.3.)
Employees
in certain health care industries or subject to collective bargaining
agreements may be subject to variances of these requirements.
Rest Periods
All employees are required to take a paid rest period
at the rate of ten (10) minutes net rest time per four (4) hours of work or
major fraction thereof. This does not apply to work schedules of less
than three and one-half (3 ½) hours in duration. The DLSE takes the
position that the language “major fraction thereof” refers to time in excess of
two (2) hours. (Opinion Letter 1999.02.16.)
The DLSE has made clear that the maximum penalty that
can be levied for meal time and rest time violations is one (1) per day for a
meal time violation and one (1) per day for a rest time violation, even if more
than one rest period was mandated for that day. Notwithstanding, meal
time violations and rest time violations are treated separately, so a maximum
of two (2) hours per day is possible if both meal time and rest time violations
occur on the same day.
What Must Employers Do?
1. An employer should always maintain accurate
records of the hours actually worked by an employee.
Often the employee does not
have an accurate record of the specific days and will instead describe general
practices from which a conclusion can be reached that meal times were not
given. An employer will not make much headway by arguing that it has no
records regarding whether or not an employee took meal time breaks. If a
current system is not in place to track hours worked, it may be time to update
the employer’s system.
2. Do Not Rely On Employees to Self-Police
Their Meal/Break Time Periods.
Similarly, relying on employees
to self-police their own meal time and break time periods is simply a bad idea. It is the employer’s
responsibility to ensure that meal time periods and break time periods
are taken in accordance with law. Some sort of system should be in place
to document when meals and breaks are taken. If a time-clock system is
used, employees should punch in and out for meal times. For break time
periods, even though an employee is being compensated and therefore will not
clock out, a notation should be required by the employee on the time card
reflecting when they took their break and when they returned. Whatever
system is in place, the records should be reviewed regularly by supervisors
with an eye toward spotting violations and correcting them.
3. Monitor and Enforce Compliance
Violations
It is not enough to
implement a meal and rest time policy that mirrors the requirements of Labor
Code section 226.7. An employer must monitor that policy and enforce
violations. Each day holds the opportunity for a new violation and
resulting premium. Without some system to check compliance, months or
years can go by without correcting an ongoing practice.