The California Court of Appeal’s decision in Gerard v. Orange Coast Memorial Medical Center, decided on Tuesday, February 10, 2015, landed a severe blow to California’s already struggling Hospitals. In Gerard, the Court invalidated a section of Wage Order 5 relating to meal period waivers in the Health Care Industry which has been relied upon by Hospitals for many years. The Court held that Section 11(D) of Wage Order 5, the Wage Order applicable to the Health Care Industry, is invalid to the extent it allows employees to waive their second meal periods on shifts longer than 12 hours. Section 11(D) states “employees in the healthcare industry who work shifts in excess of eight (8) total hours in a workday may voluntarily waive one of their two meal periods.” The Court held that this language in the Wage Order was inconsistent with Labor Code Section 512 with regard to shifts that are longer than 12 hours.

As a result, any Hospitals who currently do not require their 12 hours shift employees to take two uninterrupted 30 minute meal periods when they work more than 12 hours will need to evaluate their practices and discuss the impact of this case with legal counsel. Notably the requirement that health care workers take two meal periods when they work more than 12 hours applies even if the employee works only a few minutes over 12 hours as a result of incidental overtime. This change in the law will have substantial impact on the ability of Hospitals to schedule their employees with flexibility and is likely to meet resistance by many employees.

Unfortunately, there are a number of questions left unanswered by the decision.

The most important unanswered question is whether this change will apply retroactively and thus open California hospitals up to potential class action lawsuits for missed meal periods going back four years. While the Court claims that the retroactive application of the decision is an issue to be decided by the trial court on remand, it also states that “Plaintiffs are entitled to seek premium pay under section 226.7 for any failure by hospital to provide mandatory second meal periods before today that falls within the governing three-year limitations period.” The Court’s ruling on the retroactive application of the decision is unclear at best but seems to hold that the decision will have retroactive effect.

An additional unanswered question is whether Defendant will appeal this decision to the California Supreme Court and whether the Supreme Court would accept the case on appeal. Because this is a statutory interpretation issue, the Supreme Court may not grant review and any modification may require legislative change. However, given the ambiguity of the case regarding retroactivity, there is a chance the Supreme Court might accept the case on appeal.

An additional unanswered question is how this decision will impact other meal period practices which have been based upon Section 11(D) of Wage Order 5. Many Hospitals have a current practice of allowing their 12 hour shift employees to waive either the first or second meal period provided they do not work more than 12 hours as expressly allowed by Wage Order 5. In other words, Hospitals have allowed their 12 hour healthcare employees to commence their first meal period after working nine or ten hours instead of requiring them to start their first meal period before the start of the sixth hour of work. The Court’s decision in Gerard does not address whether this practice is still lawful under Wage Order 5 Section 11(D).

Given the number of class actions brought against employers in California and against Hospitals in particular, this practice will undoubtedly be challenged by Plaintiffs’ lawyers at some point in the future. Given the Court’s decision regarding the retroactive application of its ruling, employers may want to modify this practice even absent an explicit ruling on this issue. Employers should discuss the potential impact of modifying this practice with counsel. Potential consequences include the elimination of Management’s flexibility in scheduling and an adverse impact on employee morale since employees typically prefer to take only one meal period on a 12 hour shift and typically prefer to take that meal period later in the day. In addition, because many Collective Bargaining Agreements incorporate the language of Wage Order 5, Section 11(D) into the provisions relating to meal periods, modifying this practice could implicate federal labor law and may require negotiation with the applicable union(s).