California employers have updated meal and rest break premiums to abide by. The California Supreme Court recently clarified the correct methodology for calculating the payment of meal and rest break premiums, which pivots away from the long-assumed “typical hourly rate”. To navigate this recent decision, we break down what employers need to know about meal and rest breaks and how they should prepare moving forward.

California’s Meal and Rest Break Law

In a past decision, the Second Appellate District ruled in favor of the employer and determined that meal and rest period premiums only had to be paid at the employee’s typical hourly rate. However, on July 15th, 2021, the Court issued a unanimous decision in Ferra v. Loews Hollywood Hotel, LLC, which found that employers must pay meal and rest period premiums at an employee’s regular rate of pay.

According to California Labor Code section 226.7 (b), “if 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 workday that the meal or rest period is not provided.” The Supreme Court in Ferra analyzed the statutory history of Labor Code section 226.7 and noted that although the phrases were different – “compensation” is broader in scope than the definition of “pay” – the two terms were intended by the Legislature to require premium payments at the employee’s regular rate of pay.

What is a Meal Break?

A meal break is a 30-minute period of rest provided to employees for each shift longer than 5 hours. During this unpaid, uninterrupted break, employees are allowed to run errands, eat their meals, or do anything they choose. For a lawful meal break, employers must relieve the employee of all duties and relinquish control of employee activities. Employers are not allowed to impede or encourage employees from taking this break, such as create incentives to skip their meal breaks.

What is a Rest Break?

A rest break is a 10-minute uninterrupted break for every four hours of work. Employees who work less than three-and-a-half hours are not eligible for rest breaks. During this break, employees must be relieved of all duties. Unlike meal breaks, rest breaks are paid breaks. Although employees can waive rest breaks, employers cannot coerce or persuade employees to skip their rest break.

What This Means For California Employers in 2021

Employers who fail to provide or unlawfully deny meal or rest breaks are required to give their employees an additional hour of pay at the employees’ hourly rates of pay. This is known as “premium pay.” Employees have the right to bring a claim for up to three years from the date of violation so employers who fail to give premium pay can be hit with wage claims or lawsuits. Keep in mind that each case is unique so it is best to have an employment attorney at hand to evaluate your options.

Additionally, employers must account for all non-discretionary compensation paid to an employee when calculating and paying meal and rest period premiums. Employers should already be calculating their non-exempt employees’ regular rates of pay because employers must use this rate for any overtime an employee works. An employee’s regular rate of pay can change from workweek to workweek because the rate includes many types of non-hourly compensation, such as non-discretionary bonuses, commissions, various employee benefits, and employee housing benefits.

Key Takeaways

To stay in compliance with the decision imposed by the Supreme Court regarding meal and rest breaks, employers should reassess their current policies and make sure that they are providing their employees proper break times. Employers should also implement policies that ensure any such premiums are paid at the correct rate. If you need assistance with meal and rest period premium compliance, please don’t hesitate to contact Hackler Flynn & Associates.

DISCLAIMER: Content within this post should not be considered legal advice and is for informational purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post. Hackler Flynn & Associates is only licensed to practice in California.