California Supreme Court Ruling Raises Cost of Missed Meal and Rest Breaks

Author: Michael Cardman, XpertHR Legal Editor

July 19, 2021

When an employer fails to provide employees meal, rest or recovery breaks, California law requires that it pay them one additional hour of pay at their "regular rate of compensation."

That includes not just their hourly wages, but also any other nondiscretionary payments such as bonuses, the Supreme Court of California has ruled in Ferra v. Loews Hollywood Hotel.

The difference will be relatively minor in most cases.

For example, consider an employee who works a 40-hour workweek and is paid California's current minimum wage of $14.00 for large employers. In most weeks, if they miss a break period, they would be owed an additional $14.00. However, in a workweek in which they miss a break period and are paid a nondiscretionary bonus of $100, they would be owed $16.50 ($560 in straight-time earnings plus $100 divided by 40 hours).

While individually small, these costs may add up to something more substantial.

The court said its decision applies retroactively, so employers that have not previously included nondiscretionary payments when calculating missed-break premiums may be liable for up to four years' worth of underpayments.

In addition, employers could be exposed to class action lawsuits if multiple employees are subject to the same pay practices. "We expect to see a proliferation of these claims being filed or added to pending class actions and [Private Attorneys General Act (PAGA)] lawsuits," said attorneys Fred Plevin and Corrie Klekowski of the firm Paul, Plevin, Sullivan & Connaughton.