California Labor & Employment Law Blog

By Alison L. Tsao

On April 15, 2008, the California Senate Labor and Industrial Relations Committee unanimously approved SB 1539 as amended to “declare the intent of the Legislature to enact legislation to address issues related to meal periods in employment.”   SB 1539, authored by Senator Ron Calderon (D-Montebello), sponsored and supported by the California Chamber of Commerce, California Restaurant Association, and approximately 40 trade and professional organizations, was introduced to provide a comprehensive solution to compliance with and enforcement of California’s meal period laws.

SB 1539 has generated bipartisan support from Committee members who have expressed concern over the inflexibility and ambiguity of meal period laws in California that have spawned a tidal wave of expensive litigation and liability for California employers.  As a result, Committee members have recognized the need for clarity and greater flexibility to meet the needs of both employers and employees.  SB 1539, as originally drafted, would have provided for the following changes to existing meal period law (among others):  (1) allowing the employee to waive either the first or second meal period if the employee is otherwise entitled to two meal periods in a day; (2) expanding conditions for employees to take on-duty meal periods; (3) allowing collective bargaining agreements to override provisions of the meal period rules; and (4) defining “providing an employee with” a meal period to mean “giving the employee an opportunity to take” a meal period.  The Committee amended SB 1539 to delete all of the substantive changes to the meal period laws, and amended the bill to simply declare the intent of the Legislature to enact legislation to address issues related to meal periods in employment.  While the meal period laws have not been changed, the Legislature’s declaration of intent is a good sign that lawmakers recognize the need for change and will continue to have further discussions to try to find consensus on a solution that contains adequate protections for employers and employees.  SB 1539 has been referred to the Senate Appropriations Committee.  Employers and employees are encouraged to contact the Senate Appropriations Committee to voice their opinions regarding SB 1539 to continue to build the momentum for change in meal period laws.  We will continue to monitor this legislation and apprise you of any developments.

By Kent J. Sprinkle

A federal district court recently addressed the ongoing debate in California regarding what it means to "provide" employees with meal breaks under California law.  California's Department of Labor Standards Enforcement takes the position that employers have an affirmative obligation to ensure that employees take their meal breaks and that employers are liable for one hour of premium pay for each meal period that is not taken (or that is not timely taken), regardless of the reason.  Plaintiffs' attorneys often cite to Cicairos v. Summit Logistics, 133 Cal.App.4th 949 (2005), as endorsing the DLSE's interpretation of the law.  In contrast, as discussed in a prior post on July 22, 2007, at least one federal district court rejected the DLSE's interpretation and instead determined that an employer complies with its obligation to "provide" meal periods if the employer makes the meal periods available to employees and provides the opportunity for employees to take them.  (White v. Starbucks, 497 F.Supp.2d 1080, 1088-89 (N.D. Cal. 2007)).  In White, the court held that in order to prevail on a meal period claim, the plaintiff would have to show that he was "forced to forego" meal periods, not simply that he did not take them. 

Another federal court has now weighed in on the subject and agreed with White v. Starbucks. In Brown v. Federal Express Corporation, et al., 2008 WL 906517 (C.D. Cal. Feb. 26, 2008), District Judge Dale Fischer denied class certification to a subclass of driver employees that were allegedly denied meal and rest breaks.  The plaintiffs and putative class members were current and former non-exempt hourly drivers employed by Defendant Federal Express Corporation.  The plaintiffs claimed that the putative class of drivers, who performed a variety of delivery and hauling duties with varied types of work and distances driven, were allegedly put under excessive pressure to make deliveries as quickly as possible, such that they were unable to take meal and rest breaks within the time required by law.  They also alleged that FedEx failed to pay an additional hour of pay to putative class members who missed their meal and/or rest breaks.  In denying class certification, the court held that FedEx's requirement to "provide" meal periods only meant making meal periods available to employees.  "It does not suggest any obligation to ensure that employees take advantage of what is made available to them."  Brown, 2008 WL 906517 *5.  Citing White v. Starbucks, Judge Fischer held that "[r]equiring enforcement of meal breaks would place an undue burden on employers whose employees are so numerous or who, as with Plaintiffs, do not appear to remain in contact with the employer during the day.  It would also create perverse incentives, encouraging employees to violate company meal break policy in order to receive extra compensation under California wage and hour laws.  In the absence of California Supreme Court precedent, this Court must apply the rule it believes the court would adopt under the circumstances. (internal citations omitted).  The court does not believe that the California Supreme Court would adopt the enforcement rule advocated by Plaintiffs."  Brown, 2008 WL 906517 at *6.

The court in Brown  also relied on language in the California Supreme Court's decision in Murphy v. Kenneth Cole Prods., Inc., 40 Cal.4th 1094, 1104 (2007), as supporting its interpretation of "providing" meal breaks.  "The California Supreme Court has described the interest protected by meal break provisions, stating that '[a]n employee forced to forgo his or her meal period . . . has been deprived of the right to be free of the employer's control during the meal period.' (citing Murphy, 40 Cal.4th at 1104).  It is an employer's obligation to ensure that its employees are free from its control for thirty minutes, not to ensure that the employees do any particular thing during that time.  Indeed, in characterizing violations of California meal period obligations in Murphy, the California Supreme Court repeatedly described it as an obligation not to force employees to work through breaks."  (internal citations omitted).

Notably, the Brown court rejected Plaintiffs' argument that Cicairos v. Summit Logistics, Inc. compelled a contrary conclusion.  In addition to rejecting the notion that Cicairos mandates that "employers have 'an affirmative obligation to ensure that workers are actually relieved of all duty,'" the court in Brown also distinguished the decision, pointing out that in Cicairos, "the court found liability where an employer simply assumed breaks were taken, despite its institution of policies that prevented employees from taking meal breaks."  2008 WL 906517 at *6.  Though not discussed in such detail by the court in Brown, it is notable that a distinguishing fact (the policy that was considered to prevent employees from taking breaks) in Cicairos was the absence of a code for meal or rest breaks whereas the driver employees were required to enter codes for all sorts of other activities conducted during the work day.

After articulating the legal standard for what it means to "provide" meal periods, the Brown court found that there was no evidence of any particular policy at FedEx susceptible to common proof to show that drivers were affirmatively prevented from taking required breaks.  As a result, the court found that individual issues predominated on the meal period claims, and denied class certification.

While federal district court decisions are not binding on state courts or on the Ninth Circuit, the growing acceptance of the reasoning in White v. Starbucks is a good sign for employers.  The extended discussion in Brown regarding the Supreme Court's comments in Murphy is also a good sign, since the Murphy case, while not squarely addressing the standard for "providing" breaks, certainly provides a sound basis for the reasoning in Brown.  We will closely monitor further developments on this important issue and will post any news. 

Posted by Jennifer Barrera

A judge in the Northern District of California recently ruled that an on-duty meal period is not equivalent to a “waived” meal period.  In McFarland v. Guardsmark, LLC, the employee (a security guard) worked shifts in excess of ten hours, thereby entitling him to two meal periods under California's Labor Code.  The employee later filed a lawsuit against his employer, claiming the two on-duty meal periods in one shift were essentially two waived meal periods, and therefore violated his right to a duty-free meal period.  The employee relied upon an excerpt from the Department of Labor Standards Enforcement (“DLSE”) Operations Manual that implied the DLSE considers an on-duty meal periods as a “waived” meal period and that an employee cannot waive two meal periods in one shift.  The employer filed a motion for summary judgment and argued that an on-duty meal period is a type of paid meal period, not a waived meal period. 

In her ruling, the judge rejected the DLSE’s interpretation of on-duty meal periods and stated that courts are not required to defer to the DLSE’s manual.  The judge agreed with the employer and held that an on-duty meal period is not a waived meal period and, therefore, the employee may take two on-duty meal periods in one shift, assuming the other requirements for an on-duty meal period are satisfied. 

The employee’s attorneys have indicated that they are planning to appeal this ruling, and we will provide updates if the court's decision is ultimately reviewed on appeal.  In the interim, please contact us with any questions on this issue or to discuss the requirements an employer must satisfy to establish an on-duty meal period. 

Posted by David V. Greco

Employers facing class actions for failure to provide employees with meal and rest breaks received a bit of good news from a California appellate court when it denied class certification on such claims because it determined that common questions of law and fact did not predominate. 

Specifically, in Bell v. Superior Court, plaintiffs were drivers who claimed, among other things, that their employer failed to provide them meal and rest breaks as required by law.  Plaintiffs contended that the company had an unwritten policy of scheduling too much work to allow drivers to take their breaks and submitted declarations to support their claims.  In response, the company submitted evidence demonstrating that meal and rest breaks were provided, including personnel handbooks and manuals that set forth policies for meal and rest breaks and declarations confirming that drivers were trained to take breaks and that at least some drivers did so.  The court denied class certification, finding that individual issues predominated over common issues, based in part on its determination that there was no evidence of a company-wide policy prohibiting meal and rest breaks. 

What this means for California employers is that the existence of written policies directing employees to take meal and rest breaks (including those in employee manuals) is something that courts consider when determining whether or not to certify a class.  Drafting and implementing such policies is a relatively simple process, and one which – as shown by this case – can have significant positive repercussions at a later date. If you have any questions regarding drafting such policies or the implications of this decision for your business, please contact us directly.

Posted by Kent J. Sprinkle

There have been few decisions dealing with the question of whether employers are merely obligated to "provide" meal breaks to employees simply by making such breaks available or – as many plaintiffs have argued – whether the obligation to "provide" meal breaks in fact carries with it an obligation for employers to forcefully ensure that employees are actually taking such breaks, e.g., to actively police employees to ensure meal breaks are both offered and taken.  The answer to this question will clearly have a significant impact on whether such claims are amenable to class treatment in class actions. 

Appearing to address this issue favorably for employers, a California Court of Appeal in Brinker Restaurant Corp. v. Superior Court, 2007 WL 2965604 (Oct. 12, 2007) – a recent but as yet unpublished decision – reversed a trial court's class certification order (which included meal and rest break claims), stating that the trial court's order relied on improper criteria and incorrect assumptions, including its failure in deciding the issue of what it means to "provide" meal breaks.  The Brinker court held that the class certification order was erroneous and had to be vacated because, among other reasons, "the class certification order rests on an incorrect assumption with respect to the meal period claims to the extent those claims are based on the theory that [the employer] had a duty to ensure that its hourly employees took the meal periods it provided to them, and thus the court abused its discretion in finding that these claims are amenable to class treatment." 

Specifically, in Brinker, a group of restaurant employees sued their employer for alleged failure to provide certain rest breaks and meal breaks, or compensation in lieu of such breaks, and also claimed that the restaurant required them to perform "work off the clock" during meal periods.  The decision contains substantially positive analysis concerning these claims as well as their amenability to class treatment, including a discussion of when breaks must be provided in terms of timing during the workday and that rest periods may be waived.  However, a most notable feature of the opinion is that it apparently, although not expressly, endorses the interpretation that an employer's obligation to "provide" employees with a meal break merely means to "offer" meal breaks or to make such breaks available.  The Brinker Court cited White v. Starbucks Corp., 497 F.Supp.2d 1080 (N.D. 2007), a positive published federal decision which held that "provide" requires only that employers "offer" meal breaks.  Unfortunately, the Brinker decision avoids a completely clear ruling on this question, instead pointing to the trial court's error in simply failing to decide on the issue of the meaning of "provide," but the cite to White may be indicative of the trend in such cases.  Hopefully, the Brinker decision will ultimately be published and subsequent cases, especially class action cases, will benefit from having a clearer answer to the question of how to "provide" meal breaks once and for all.  

Posted by Nancy G. Berner

The California Assembly adjourned the 2007 session without voting on Assembly Bill 1711, a bill that proposes sweeping changes to the Labor Code provisions regulating meal and rest break requirements imposed on California employers.  The Labor Code amendments were proposed by Assembly Member Lloyd Levine on the last day members were permitted to make amendments, and we anticipate that Assembly Member Levine’s proposal will be debated and considered when the Legislature reconvenes in January.  Given the controversial issues addressed in this Assembly Bill, it is likely that other proposals will also be considered in the next legislative session.

Posted by Nancy G. Berner

Last week, California Assembly Member Lloyd Levine proposed broad changes to sections of the California Labor Code regulating, among other rules, the meal and rest break requirements imposed on the state’s employers as part of AB 1711.  The bill’s most important provisions are summarized below. 

Meal Break Timing and On Duty Meal Periods

The proposed legislation requires that the meal period shall be completed before the end of the sixth hour of work.  The current interpretation is that the meal period must be commenced before the end of the fifth hour, so this bill would provide greater flexibility in the scheduling of meal breaks if enacted.

The bill also contains significant modifications to Labor Code section 512(b), regulating provision of an on-duty meal period.  Current regulation leaves employers to guess when an on-duty meal period is permitted, and prudent employers generally guess “very rarely” based on prior opinion letters issued by the Division of Labor Standards Enforcement interpreting the on-duty meal break provisions. 

Mark S. Spring, our firm's Managing Partner, was the featured guest expert for the most recent In the Know Podcast series. In this podcast, Mr. Spring discusses the issues related to the California meal and rest break compliance difficulties and the recent waive of class action lawsuits against California employers related to the meal and rest break regulations. You will hear Mr. Spring discuss the ramifications of several recent court opinions and provide some recommendations that California employers can use to try to minimize the risk of being the next defendant in one of these class actions. To listen/download the podcast click here.

Posted by David V. Greco

On August 9, 2007, the Division of Labor Standards Enforcement ("DLSE") held its second public hearing – this one in Los Angeles – to hear comments regarding meal and rest break laws and regulations in California (the first session of the DLSE's public forums was held in Sacramento on August 2, 2007; please see August 3^rd blog entry).  The DLSE held these public hearings to allow both employers and employees the opportunity to explain how California meal and rest break laws affect their day-to-day work lives.  Similar to the Sacramento session, this topic sparked very heated and passionate comments by both employers and employees.

Interestingly, employees in various industries spoke in favor of modifying the laws to provide more flexibility with respect to when they may take their meal breaks during the work day.  Both the healthcare and transportation industries were represented in extremely high numbers.  The majority of the nurses and drivers who spoke expressed their frustration with the current state of the law mandating that they must take their meal breaks at or before the five hour mark during their work day.  Many nurses commented on the impracticality of being forced to immediately stop tending to patients because they must take their breaks or face disciplinary action.  Drivers also expressed their frustration, explaining that it is almost impossible and extremely dangerous to expect them to comply with the law by pulling their vehicles off the road to ensure that they do not violate the five hour requirement.

On the other hand, there were also employees in attendance who voiced their concern that any modification of the current laws would result in employers taking away their right to meal and rest breaks.  Several of the employees who opposed any changes testified about the poor working conditions in their current workplaces, and the fact that they are not permitted to take any breaks.  Representatives of employee advocacy organizations in attendance claimed that any leniency in this area would reduce productivity and increase work-related injuries.

The employers who attended the hearing uniformly testified that they had no interest in eliminating breaks for employees; rather, they simply want some flexibility in this area, both for themselves and their employees.  They complained that the current laws are too confusing, unrealistic, and overly burdensome, and that the DLSE needs to provide greater guidance on these issues.  Many of the employers also stated that the current laws have a detrimental effect on their employees.  For example, some employers testified that their employees sometimes ask to forego meal breaks in order to leave work early to tend to personal matters.  Under the current state of the law, employers cannot consent to this arrangement, which in turn causes friction between employees and management.  Additionally, employers in the restaurant industry indicated that their employees complain that taking breaks has a detrimental effect on their tip income.  The employers who attended this hearing also made reference to the recent increase in litigation for alleged meal and rest break violations, including class actions, which are financially crippling some businesses.

Please note that the DLSE will accept written comments and legal briefs on these issues until August 31, 2007.

Posted by Jennifer D. Barrera

On August 2, 2007, California's newly-appointed Labor Commissioner, Angela Bradstreet, held a public hearing to obtain comments regarding meal and rest break laws and regulations in California.  This public hearing was sparked by recent court decisions concerning the standard for meal and rest breaks, including Murphy v. Kenneth Cole Productions, Inc., 40 Cal.4^th 1094 (2007), White v. Starbucks Corp., 2007 WL 1952975 (N. D. Cal. July 2, 2007), and Brinker Restaurant Corporation et al. v. Hohnbaum et al. which is currently pending before the Fourth District Court of Appeal.  At the hearing, this topic proved to still be a sensitive issue between employers and employees. 

Employees from various industries voiced their concern that any modification of current law regarding meal and rest breaks would provide employers with the opportunity to essentially take away employees' rights to meal and/or rest breaks.  Employees alleged that any leniency in this area would allow employers to pressure them to forego their breaks by praising others who did so and setting higher standards of enforcement.  Moreover, employees claimed that reducing or eliminating the mandatory nature of breaks would reduce productivity and increase work-related injuries. 

Employers, on the other hand, testified that they had no interest in eliminating breaks for employees; rather, they simply want some flexibility in this area.  Employers complained that the current laws are too confusing, unrealistic, and overly burdensome on employers.  For example, employers in the transportation and trucking industry testified that it is impossible to ensure that their drivers who are out on the road are taking a thirty minute meal period at or before five hours of work, as the law currently requires them to do.  Additionally, employers in the restaurant industry stated that the unpredictable nature of their business makes scheduling breaks for employees impossible. Moreover, employees in this industry may resent their employers for forcing them to take meal breaks as it reduces their tip income and extends their workday.  The employers who attended this hearing also referenced the recent increase in litigation for alleged meal and rest break violations, including class actions, which are financially crippling businesses.

The Department of Labor Standards Enforcement is holding another public hearing in Southern California to obtain additional comments regarding meal and rest break laws and regulations on August 9, 2007, from 9:00 to 2:00 p.m. at California State University Northridge.  The DLSE is also accepting written comments and legal briefs on this issue until August 31, 2007.

The Division of Labor Standards Enforcement ("DLSE") has announced that it will be holding two forums to allow members of the public to address newly-appointed California State Labor Commissioner Angela Bradstreet and raise concerns regarding recent changes to meal and rest period enforcement practices in California.

The first forum will be held on August 2, 2007, from 9:00 a.m. to 2:00 p.m. at the Sacramento State Alumni Center located in Sacramento; the second forum will take place on August 9, 2007, from 9:00 a.m. to 2:00 p.m. at the California State University Northridge Student Union.  Specific information can be obtained by clicking here. 

Additionally, the public may submit written comments to the DLSE regarding these issues on or before August 31, 2007.

Posted by Robin E. Weideman

Employers have reason to hope that their liability for missed meal periods may be less than some first thought when the California Supreme Court issued its much-publicized ruling in Murphy v. Kenneth Cole Productions, Inc. Murphy held that that fines arising from meal and rest break violations in California constitute "wages," for which there is a three-year statute of limitations, rather than a "penalty," which would have carried only a one-year statute of limitations. In White v. Starbucks, _ F. Supp. 2d _, 2007 WL 1952975, at *7-*8 (N. D. Cal. July 2, 2007), a federal district court held that California Labor Code § 226 and the IWC Wage Orders’ requirements that employers “provide” employees with meal periods means simply that the employer must offer the employees meal periods; the employer is not required to ensure that the meal periods are taken. 

In White, the court further held that in order to prevail on a meal period claim, a plaintiff would have to show that he or she was “forced to forego” a meal period by the employer. The court reasoned as follows: “The interpretation that [plaintiff] advances -- making employers ensurers of meal breaks -- would be impossible to implement [in industries] in which large employers may have hundreds or thousands of employees working multiple shifts. Accordingly, the court concludes that the California Supreme Court, if faced with this issue, would require only that an employer offer meal breaks, without forcing employers actively to ensure that workers are taking these breaks. In short, the employee must show that he was forced to forego his meal breaks as opposed to merely showing that he did not take them regardless of the reason. . . .[Otherwise,] employees would be able to manipulate the process and manufacture claims by skipping breaks or taking breaks of fewer than 30 minutes, entitling them to compensation of one hour of pay for each violation. This cannot have been the intent of the California Legislature, and the court declines to find a rule that would create such perverse and incoherent incentives.”

The plaintiff admitted that any meal periods he missed were as a result of his own decision to skip the meal periods. There was no evidence that Starbucks had “forced [plaintiff] to forego” meal periods. On these facts, the court held that Plaintiff could not succeed on his meal period claim and summary judgment was appropriate. 

The district court’s ruling in White is significant because it does not place the burden on the employer to force employees to take meal breaks. Rather, it simply requires that the employer provide the opportunity to take the meal break. One cautionary note: in reading White, employers must be mindful the ruling was issued by a federal district court. Although the opinion of a federal district court can be used to persuade other state and federal courts to decide the meal break issue similarly, neither the Ninth Circuit nor California state courts are bound by the district court’s ruling.       

Earlier this week, the California Supreme Court issued its long awaited ruling in Murphy v. Kenneth Cole, deciding that fines arising from meal and rest break violations in California constitute "wages," for which there is a three-year statute of limitations, rather than a "penalty," which would have carried only a one-year statute of limitations.  (For your convenience, a link to the decision appears below.)  Not only does this obviously triple the time period for the recovery of such wages, it also triggers potential liability for "waiting time" penalties for employees who have terminated during the prior three years, additional related penalties, and attorneys' fees.  To make matters worse, such claims typically include an allegation of unfair competition (B&P Code Section 17200), which carries a four year statute of limitations.

The California Supreme Court's decision even further underscores the importance of ensuring that employers' meal and rest break policies are compliant with California law, as well as the importance of ensuring those policies are being followed by all employees. In addition, employers may want to consider paying out the extra hour of pay to employees when it is clear that they were denied  a meal break or denied the opportunity to take a rest break.  Unfortunately, we expect this ruling will result in a significant increase in class action filings.

If you have any questions about how this ruling affects you, please do not hesitate to call or write any of the attorneys that you work with at CDF LLP.

Link to decision:  http://www.courtinfo.ca.gov/opinions/documents/S140308.PDF

The California Supreme Court granted review of National Steel and Mills (see below). Click here or here to read prior posts regarding how California courts are ruling on the issue about whether Labor Code § 226.7 penalties for meal and rest break violations are subject to a three year or a one year statute of limitations.

NATIONAL STEEL & SHIPBUILDING v. S.C. (GODINEZ)
Case: S141278, Supreme Court of California

Date (YYYY-MM-DD):2006-04-12
Event Description:Review granted/briefing deferred (rule 29.1) - civil case
Notes:
Petition for review GRANTED. Further action in this matter is deferred pending consideration and disposition of a related issue in Murphy v. Kenneth Cole Productions, Inc., S140308 (see Cal. Rules of Court, rule 28.2(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 29.1, is deferred pending further order of the court. Werdegar, J., was absent and did not participate.
Votes: George, C.J., Kennard, Baxter, Chin, Moreno, and Corrigan, JJ.

MILLS v. S.C. (BED, BATH & BEYOND)
Case: S141711, Supreme Court of California

Date (YYYY-MM-DD):2006-04-12
Event Description:Review granted/briefing deferred (rule 29.1) - civil case
Notes:
Petition for review GRANTED. Further action in this matter is deferred pending consideration and disposition of a related issue in Murphy v. Kenneth Cole Productions, Inc., S140308 (see Cal. Rules of Court, rule 28.2(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 29.1, is deferred pending further order of the court. Werdegar, J., was absent and did not participate.
Votes: George, C.J., Kennard, Baxter, Chin, Moreno, and Corrigan, JJ.

The Court's granting of review was likely given the conflicting lower court holdings on whether Labor Code § 226.7 penalties for meal and rest break violations are subject to a three year or a one year statute of limitations. [Click here, or here to read prior posts on Murphy]

The California Supreme Court asked the parties to brief the following issues:

Request for judicial notice granted. Petition for Review GRANTED. The parties are directed to brief and argue the following issues: (1) Is a claim under Labor Code section 226.7 for the required payment of 'one additional hour of pay at the employee's regular rate of compensation' for each day that an employer fails to provide mandatory meal or rest periods to an employee governed by the three-year statute of limitations for a claim for compensation (Code Civ. Proc., §338) or the one-year statute of limitations for a claim for payment of a penalty (Code Civ. Proc., §340)? (2) When an employee obtains an award on such a wage claim in administrative proceedings and the employer seeks de novo review in superior court, can the employee pursue additional wage claims not presented in the administrative proceedings?

On January 27, 2006, the Second Appellate District issued a holding that the payments required under Labor Code section 226.7 are penalties and, therefore, a one year statute of limitations governs the payments, as opposed to a three year statute of limitations if the payments are considered wages. This holding is one of many recent (and conflicting) holdings on this issue as illustrated below.

Cases Holding 226.7 Payments are Penalties (and therefore a one year statute of limitations applies):
1. Mills v. Superior Court (Jan. 27, 2006) ___ Cal.4th __, 2006 [PDF] [WRD]
2. Murphy v. Kenneth Cole Productions, Inc. (2005) 134 Cal.App.4th 728
3. Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 35, 381, fn. 16
4. Hartwig v. Orchard Commercial, Inc., Case No. 12-569901RB (This case only binding on any hearing before a Deputy Labor Commissioner or Hearing Officer.) [Click here to read further analysis on Hartwig]

Cases Holding 226.7 Payment are Not Penalties (and therefore a three year statue of limitations applies):
1. National Steel and Shipbuilding Company v. Superior Court (Jan. 20, 2006) __ Cal.4th __, 2006 WL 147520 (with Justice Irion dissenting)
2. Tomlinson v. Indymac Bank, F.S.B. (C.D. Cal. 2005) 359 F.Supp.2d 891 (This case is a federal case and therefore is not binding on California state courts. Indeed, Mills v. Superior Court, above, explicitly rejected Tomlinson's reasoning.)

California law currently requires employers to pay a penalty, measured in the amount of one hour's wages, to any employee who is denied a mandatory meal or rest break. The confusing language of the statute itself (codified at Labor Code Section 226.7) is no doubt partly responsible for the tidal waive of class action lawsuits that followed in the wake of its enactment in 2001. Indeed, the difficulty faced by employers in attempting to interpret and apply its ambiguous requirements was recently on display when two separate appellate courts reached diametrically opposite conclusions on the same question: i.e. is the payment required under the act really a "wage" or a "penalty?"

This seemingly semantic dispute has important real-world consequences. If the payment is a "penalty" then a one-year statute of limitations would apply. On the other hand, if the payment is a "wage," then the three-year statute of limitations would apply.

In December 2005, the First Appellate District held in Murphy v. Kenneth Cole Productions, Inc. that the payment is necessarily a penalty because it "is not compensation for labor performed, but is an arbitrary amount imposed on the employer in addition to the salary already paid during the time the employee was not eating or not resting. It is not overtime pay for an allowed work period, but a penalty for violating the law that prohibits work during those times."

Within barely a month, however, the Fourth Appellate District reached the opposite result, in National Steel and Shipbuilding Company v. Godinez that the payment must be characterized as a "wage" because it believed the objective of the statute was "to pay employees for additional work performed during mandated meal or rest periods and deter employers from requiring employees to work through these periods."

Moreover, on January 13, the Division of Labor Standards Enforcement (DLSE) withdrew its proposed interpretive regulations, which have been winding their way through the public comment process for nearly a year. [See related article]. Ironically, the DLSE claimed in a press release that the regs were withdrawn because the Murphy v. Kenneth Cole decision had rendered further clarification unnecessary. As astute observers have noted, however, the Division may not be keen to stake out a position on a question that has become a high-profile political struggle between pro-business interests and plaintiffs lawyers.

Thus, notwithstanding this recent flurry of judicial and administrative activity, the meaning of the meal and rest period statute is still in legal limbo. The California Supreme Court will ultimately need to provide any definitive interpretation and is expected to grant review of one (or, more likely, both) of the conflicting appellate cases. The Supreme Court is currently averaging one to three years from the grant of review to the issuance of a final opinion.