California Supreme Court's Ruling in Murphy v. Kenneth Cole
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