California Courts Split on Meal and Rest Break Interpretation
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 Ironically, the DLSE claimed in a press release that the regs were withdrawn because the Murphy v. Kenneth Cole decision had rendered further clarification unnecessary.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.