On February 10, 2015, California’s 4th District Court of Appeal issued its opinion inGerard v. Orange Coast Memorial Medical Center, invalidating the portion of California Industrial Welfare Commission (IWC) Wage Order No. 5 that permitted non-exempt health care employees to waive a second meal period for shifts longer than 12 hours. This is a landmark opinion, both for health care employers who have relied on this Wage Order provision and for all other California employers who rely on the IWC Wage Orders and their wage and hour rules.

For years, California employers have generally viewed the IWC Wage Orders as legally binding — both in what the Wage Orders require and in what they purport to allow. Health care employers in particular have relied on IWC Wage Order No. 5 and its provision authorizing health care industry employees to waive one of the two meal periods that are ordinarily required of non-exempt workers. This recent Court of Appeal ruling is a troubling reversal of the rule on which health care employers have relied.

Hospital Employees Challenge Wage Order No. 5

In the Gerard case, the Court of Appeal addressed what it viewed as a contradiction between IWC Wage Order No. 5 and California Labor Code Section 512 regarding employee waiver of the second meal period. Under California Labor Code Section 512, absent an advanced written waiver, a non-exempt employee may not work more than five hours per day without being provided a meal break of at least 30 minutes. If the employee then works 10 hours in a work day, he or she must be provided with a second 30-minute meal break. The Labor Code provides the second meal period may be waived only if the employee’s workday does not exceed 12 hours. In contrast, IWC Wage Order No. 5 states that health care industry employees may waive the second meal period even if their shift exceeds 12 hours.

Plaintiffs in the Gerard case sued under the California Private Attorney General Act (Labor Code § 2698, et seq.) on their own behalf and on behalf of other similarly-situated employees, alleging that, notwithstanding the Wage Order, their employer was in violation of the Labor Code. As employees at Orange Coast Memorial Medical Center (the Hospital), they regularly worked 12-hour shifts, but occasionally worked shifts longer than 12 hours. Hospital employees who worked shifts longer than 10 hours could execute written waivers of one of the two meal periods, even if the shifts lasted more than 12 hours.

The central issue in the case was the plaintiffs’ contention that the Hospital’s policy and practice was unlawful and a violation of Labor Code Section 512(a), notwithstanding the Wage Order’s express provision allowing such a practice. Their theory, with which the Court agreed, was that the IWC exceeded its authority in enacting the Wage Order, since Labor Code Section 516 provides that “[e]xcept as provided in section 512, the [IWC] may adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers.” The Court of Appeal’s view was that the critical theme of Section 516 is that the validity of IWC Wage Orders is limited to those that are “consistent with the health and welfare” of workers, holding that the statute “does not authorize the IWC to enact Wage Orders inconsistent with the language of section 512. Furthermore, ‘the broad powers granted to the IWC do not extend to the creation of additional exemptions from the meal period requirement beyond those provide by the Legislature.’”

What This Means to California Health Care Employers

The Court’s ruling raises several questions as health care employers try to figure out the impact it will have on their day-to-day operations. For example, employers who have structured their employees’ schedules such that coverage during a second meal break would not be feasible will not only need to evaluate the meal break waivers, but also their overall scheduling practices and logistics. Employers who have not previously provided for second meal breaks will need to assess how and at what part of a shift to have employees take breaks, and develop processes for ensuring that shifts over 10 hours, but less than 12 hours, end before they pass the 12-hour mark.

Unless the California Supreme Court overturns the Court of Appeal’s decision, the only fix to this issue is a legislative change to Labor Code Section 512. In the meantime, health care employers whose current wage and hour policies and practices rely on Wage Order No. 5 by having employees waive a second meal break for shifts over 12 hours should promptly consult with counsel to determine how best to revisit those policies and practices.