AUGUST 2007

JUDICIAL UPDATES

Supreme Court Ruling Means More Damages Available for Violations of Meal and Rest Period Requirements

In a long-awaited decision, the California Supreme Court unanimously ruled that the extra hour of pay for missed meal periods and rest breaks required by California Labor Code section 226.7 is a wage and not a penalty. The ruling means that employee claims to recover such pay, and additional monies, can cover a three-year period, rather than a one-year period. The Court ruled that the section 226.7 payment is a premium wage intended to compensate employees for working through a required meal or rest period. In view of other Labor Code provisions where certain payments were clearly characterized as penalties, the Court noted that the Legislature could easily have specified the payment as a penalty had it intended the payment to be one.

This decision has important ramifications for businesses. Now an employee may file a claim seeking payments for up to three years for missed breaks. In addition, employers could face waiting-time penalties for up to 30 days, if the payments have not been paid as wages owed as required at the time of termination. (Murphy v. Kenneth Cole Productions, California Supreme Court case number S140308.)

To help minimize the risk of such claims, employers should follow these guidelines:

1. Have a clear, understandable policy on meal and rest periods. Train managers on the specifics of these laws and enforce the policies.
   
   
2. Document the breaks taken. We usually recommend that an employer require employees to sign time cards that include a statement that the time card accurately shows the hours that the employee worked. The card should also state that the employee was provided an opportunity to take all breaks to which he or she was entitled for that time period.
   
   
3. Pay the extra wages promptly. If an employee misses a rest break or a meal period, pay the one hour of pay for that day in the next paycheck.
   
   
4. Check your classification of exempt employees. Be sure that, for each exempt employee, there is a solid factual foundation for your decision to classify that person as exempt. Revisit the classification periodically.

NEXT: When On Notice of Employee’s Need for Medical Leave, Company Must Notify Employee of Rights Under CFRA/FMLA