What is a meal or rest period premium?
If an employer fails to provide an employee with a meal or rest period in accordance with California law – meaning, the meal or rest period is missed, cut short, interrupted, taken late, or is not duty-free – the employer must pay the employee one additional hour of pay at the employee’s regular rate of pay for each workday that a legally-compliant meal period is not provided, and one additional hour of pay at the employee’s regular rate of pay for each workday that a legally-compliant rest period is not provided. This additional pay is called “premium” pay.
What did the Court decide?
On May 23, 2022, the California Supreme Court issued a decision in Naranjo v. Spectrum Security Services, Inc., a paramount case that determined that meal and rest period premium payments are “wages.”
The recently decided Naranjo case involved a security guard that was required to remain on duty during all meal breaks. The employee was suspended and later fired after leaving his post to take a meal break, in violation of the company’s policy that required the employee to remain on duty during all meal breaks. The employee alleged that the company violated California labor law by: (1) failing to pay meal period premiums for missed meal periods; (2) failing to report the premium pay on the employee’s wage statements; and (3) failing to timely pay the premium for missed breaks upon an employee’s separation from employment.
Previously, the Court of Appeal held that, as a matter of law, missed meal or rest period premium pay is not a “wage” for purposes of Labor Code sections 203 and 226 – meaning that an employer did not incur waiting time penalties for failing to pay all due but unpaid premium pay upon an employee’s separation of employment, and did not incur penalties for failing to list the premium pay on the employee’s corresponding wage statement(s).
The California Supreme Court reversed the Court of Appeal’s decision and held that premium payments for missed meal or rest periods are wages that:
- must be reported on wage statements during employment (Labor Code section 226); and
- paid within statutory deadlines when an employee leaves the job (Labor Code section 203).
In reaching its decision, the California Supreme Court’s rationale was that, although the extra pay is designed to compensate an employee for the unlawful deprivation of a guaranteed break, the premium pay is also intended to compensate an employee for work that the employee performed during the meal or rest period.
What now?
Employers must be vigilant and take steps to ensure that all meal period and rest period premiums earned are promptly paid and reported on the corresponding wage statement for the pay period in which it is incurred. Failure to promptly pay the premium wages may expose the employer to further penalties under the Labor Code if the premium wages are not paid in full upon the employee’s separation of employment and within the deadlines proscribed by law.
Employers are encouraged to contact experienced employment counsel for more information and for guidance in ensuring that appropriate policies and safeguards are in place.
