United States: No more free lunches: California Supreme Court makes meal and break errors more costly
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On July 15, 2021, the California Supreme Court issued an important decision on how to interpret the term “regular rate of pay” under section 226.7 of the Labor Code. Section 226.7 is the famous (or infamous) Meal and Rest Break provision of the Code that requires an employer to pay employees “one hour of overtime at the employee’s regular rate of pay” for each day worked. where a meal, rest or recovery is not performed. provided.
But how much does an hour of compensation cost? In Ferra vs. Loews, the employer argued that the “regular rate of pay” described in section 226.7 should simply be an employee’s hourly rate. In other words, an employee whose base rate is $ 15 an hour would get $ 15 for missing a meal or a break. The applicant / appellant had a different point of view. She argued that the phrase “regular rate of pay” should include not only the prime rate, but other non-discretionary compensation (for example, incentive payments / non-discretionary bonuses). His theory was that the term “regular rate of pay” should be interpreted as synonymous with the term “regular rate of pay” used in the overtime portion of the Code.
Unfortunately for the employers, the Supreme Court unanimously adopted the plaintiff’s point of view. It ruled that the words “remuneration” and “remuneration” are synonymous in the Code and that, therefore, when calculating meal or rest premiums, employers should determine the hourly rate in much the same way as ‘they calculate overtime, rather than defaulting to a basic hourly rate. rate.
Perhaps more importantly, the Court ruled that this interpretation should apply retroactively. Thus, companies that calculated meal and rest premiums at a basic hourly rate must now be prepared to deal with potential claims from individual plaintiffs, or in class or private actions under the Attorney Act. general (PAGA). While companies can’t change the past, they should work with a lawyer to review their policies on meals and meal breaks, take steps to document that employees consistently take or forgo these breaks (in the appropriate measure) and ensure that the calculations of meals and breaks the payment of the rest allowance complies with this new decision.
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