Employer Alert: California Grants Another ‘Bonus’ for Respecting Meal Periods | Vide Rome LLP

California is infamous for its hostility towards employers. On May 23, the California Supreme Court continued its unwavering mission to solidify this well-deserved reputation by issuing a 45-page decision in Naranjo et al. v. Spectrum Security Services, Inc..a case that we are following closely in Blank Rome.

For context, non-payment of wages in California not only triggers the awarding of those unpaid wages, but also potentially severe and costly legal and civil penalties, including what are referred to as: (1) “penalties of waiting time” – up to 30 days ‘ salaries of former employees; and (2) “wage statement penalties” where unpaid wages cause an employee’s pay stub to be inaccurate. Penalties on the wage statement start at $50 for the first violation and increase to $100 for subsequent violations. When grievances are filed class-wide, these penalties can become astronomical, as they are all assessed per employee per pay period.

California is also unique in that it requires employers to provide employees with timely, fully tax-free meal periods and breaks. Failure to comply with this instruction also entails a penalty, called a meal period or “bonus” rest break. Legally speaking, these severance bonuses were not considered “wages” for all purposes under California law and therefore the employers argued that they did not trigger the additional penalties cited above. -above.

That all changed on May 23, when the California Supreme Court – partially reversing the appeals court – ruled that these severance payouts in fact To do constitute “wages” (not penalties) for the purposes of waiting time penalties and penalties on the wage statement, thus triggering the additional penalties described above. This decision is compounded by the fact that last year the California Supreme Court again reversed course against employers, holding Ferra v Loews Hollywood Hotel, LLC, that the premium rate of pay for meal periods and breaks is no longer the base rate, but rather the “regular rate of pay”, which includes all non-discretionary compensation in the same way as the rate of pay overtime is calculated. Not to mention that whenever time records show that the employee did not take a full and timely meal period, there is a rebuttable presumption that the employer did not provide it. Donohue v AMN Services, LLC.

So how does this translate into real life? If you have an employee earning $15.00 per hour who does not log a compliant meal period, whether or not the break was actually provided, you could theoretically be liable for: (1) period premium $15.00 meal; (2) penalties on the wage statement ranging from $50 to $100; (3) waiting time penalties up to $3,600; (4) civil penalties ranging from $100 to $200 per pay period; and (6) attorneys’ fees and costs.

They say perfection is a moving target, as is California wage and hour compliance in 2022.