On October 7, 2010, in Lazarin v. Superior Court, a California Court of Appeal issued a decision confirming that the collective bargaining meal period exemption contained in Wage Order 16 is invalid. According to the decision, construction employers that have negotiated with unions and agreed to meal period rules that are different than those required under the Labor Code may be subject to significant retroactive liability for meal period violations.

The defendant in the case, Total Western, Inc. (TWI), is a construction company subject to Industrial Welfare Commission Wage Order 16 (applicable to on-site construction, drilling, logging, and mining industries). Three former employees filed a class action against TWI for alleged wage and hour violations, including failure to provide second meal periods in violation of Labor Code section 512. Finding Wage Order 16’s meal period collective bargaining exemption valid, the trial court granted TWI’s motion for summary judgment. The Court of Appeal reversed.

Relying on Labor Code section 516, the court held that the meal period collective bargaining exemption contained in section 10(E) of Wage Order 16 was invalid, as it provided less employee protection than what was intended by the meal period statute, Labor Code section 512. Accordingly, the court concluded that the IWC had exceeded its authority in creating such an exemption. This portion of the Lazarin opinion is consistent with an earlier case, Bearden v. U.S. Borax, Inc. (2006) 138 Cal.App.4th 429, in which a different division within the same district of the Court of Appeal also concluded that the IWC exceeded its authority when it authored the meal period collective bargaining exemption in Wage Order 16.

In Bearden, although the Court of Appeal found the exemption invalid, it nevertheless held that the employer was not obligated to pay meal period penalties because the employer had reasonably relied on the collective bargaining exemption. Similarly, in Lazarin, TWI argued that it also should not be responsible for meal period penalties because it had reasonably relied on the collective bargaining exemption. The court disagreed, finding that the meal period collective bargaining exemption had been stricken and severed following Bearden, and it was not reasonable for TWI to continue to rely on that exemption, even though it remained in the Wage Order.

In Bearden, the court applied its ruling prospectively only, meaning an employer in violation of the meal period rules due to the invalid exemption would not be ordered to pay meal period penalties for dates preceding the Bearden decision. Disagreeing with Bearden, the Lazarin court also held that Bearden’s interpretation of the Wage Order should have been applied retroactively, not just prospectively. Thus, the court concluded that meal period penalties could also be awarded against TWI for the period that preceded the decision in Bearden.

Although Lazarin and Bearden arguably are limited to companies covered by Wage Order 16, as that is the only Wage Order containing the meal period collective bargaining exemption, it is possible that plaintiffs will attempt to rely on these decisions to attack other Wage Order meal period provisions on the ground that they too are inconsistent with Labor Code section 512.

Legislation recently signed into law, which goes into effect January 1, 2011, will exempt from the meal period requirements of California law construction workers, commercial drivers, security officers, gas and electrical corporation employees, and public utility employees who are covered by a valid collective bargaining agreement which expressly provides for meal periods.