By: Heather Domingo
This past week, the California Supreme Court clarified that calculating an employee’s one hour “regular rate of compensation” for a missed, late, or shortened meal, rest, or recovery period includes hourly wages and all nondiscretionary payments. In Ferra v. Loews Hollywood Hotel, LLC, the hourly-paid employee plaintiff filed a class action suit against Loews arguing that she did not receive the full amount of her meal and rest break premiums (a.k.a. penalties) for her noncompliant meal and rest breaks because the premiums did not include her quarterly incentive payments.
Until this week, it was unclear as to what exactly an employer needed to pay in penalties for a noncompliant meal, rest, or recovery period. The court confirmed that the phrase “regular rate of compensation” is the same as the Fair Labor Standards Act’s definition of “regular rate of pay” which includes all nondiscretionary payments, such as shift differentials, attendance bonuses, and other forms of incentive pays. The court reasoned that to hold otherwise would go against the central purpose of providing the meal and rest premiums—“shaping employer conduct to comply with labor standards.”
Further, the court held that its decision will apply retroactively, meaning that California employers may be exposed to liability if they calculated these premiums without taking into consideration any nondiscretionary bonuses, such as piece rates.
COUNSEL TO MANAGEMENT:
With this new case, California employers can expect a new wave of class actions seeking penalties for interrupted meal and rest periods. Employers are strongly encouraged to revisit payroll policies and their practices for training supervisors to ensure employees are entirely relieved of their duties during breaks. If you have any questions about how this new decision impacts pending meal and rest period lawsuits or how to implement the best policies and practices for compliance, contact the experts at The Saqui Law Group, P.C.
Disclaimer: The goal of this article is to provide employers with current labor and employment law information. The contents should neither be interpreted as, nor construed as legal advice or opinion. The reader should consult with The Saqui Law Group at (916) 782-8555 or firstname.lastname@example.org for individual responses to questions or concerns regarding any given situation.
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