Our Los Angeles Labor Lawyers Explain
California employers are alarmed since the California Legislature enacted § 226.7(b) of the California Labor Code in 2001. This section of the Labor Code requires California employers to pay the employees one hour’s pay at their usual rate for each working day the employee had to miss out a meal or rest period due to work. The California Labor Commissioner held in a landmark case namely, Hartwig v. Orchard Commercial, Inc., that the additional hour of pay an employee may recover under Labor Code §226.7 for missed meal or rest periods is a penalty, not a wage, and is, therefore, subject to a one-year statute of limitations. There is a line of decisions after the landmark case Hartwig, which either held claim of missed meal or rest periods a penalty, not a wage or the other way round. Therefore, it is a huge controversy in California whether claim of missed meal or rest periods is a penalty or wage, since the period of limitation for the claim is determined based on the settlement of the controversy.
Story Of Development
The whole debate started when the California Division of Labor Standards Enforcement (DLSE) construed and enforced the meal or rest period payment as a wage, which paved way to the application of the three-year statute of limitations. This holding of DLSE prompted the huge filings of class actions against California employers for alleged meal and rest period violations, which often resulted in ample settlements. Later in 2004, DLSE changed its view and an emergency regulation was issued in part, which clarified and stated that the payment was a penalty and not a wage. Even though this change was a boon to employers, it was only a momentary one; DLSE withdrew the emergency regulation, and pursued the formal regulatory process. Then in June 2005 the landmark case Hartwig, was decided, and there was a growth favoring the employers. In another important case, Caliber Bodyworks, Inc. vs. Superior Court of Los Angeles, the California’s Second District Court of Appeal analyzed § 226.7(b) and found that though the section does not expressly label the payment a “penalty,” it is in the nature of a statutory penalty because it requires the employer to pay more than the value of the missed or non-compliant meal or rest period. It also found that the payment does not compensate the employees for any extra time worked, but rather punishes the employer for its failure to provide required meal and/or rest periods; therefore, it should be considered a penalty. However, Caliber Bodyworks, Inc. case did not conclude this issue. There are various other cases which discussed and debated the controversy at large. Some of those cases are: Murphy v. Kenneth Cole Productions, Inc.; National Steel and Shipbuilding Company vs. Superior Court of San Diego; and Mills vs. Superior Court of Los Angeles. Later in 2006, DLSE decided to draft a new regulation, until then law dealing with the missed meal or rest period claim remained fluctuating in California courts.
Only time will clear the fog from the issue whether claim on missed meal or rest period payments are penalties, wages, or both. Until such a settlement is reached employers are to be cautious, and should take adequate care in complying with the rest and meal period requirements, and stay updated on new developments.
Contact our Los Angeles employment attorneys to learn more about how this law effects your workplace.