California hourly employees are entitled to meal breaks (30 minutes, unpaid, for roughly every five hours of work) and rest breaks (10 minutes, paid, for roughly every four hours of work). We hope that is not news to most of you. What is news, though, is a recent Court of Appeal decision that significantly ups the ante for employers who fail to provide those breaks. The court held in UPS v. Superior Court that an employee is entitled to up to two additional hours' wages for each day he or she did not receive these breaks – one hour for missing a meal break, and one hour for missing one or more rest breaks. This new case effectively doubles non-compliant employers’ penalty exposure in this already hotly contested area of wage and hour litigation.
Facts of UPS
UPS has been sued in several cases for an alleged failure to provide meal and rest periods to its California employees, as required by Labor Code section 226.7. The recent opinion addressed the consequences set forth in section 226.7 for an employer who does not provide those breaks:
If an employer fails to provide an employee a meal period or rest period . . . the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.
UPS, focusing on the “each work day” language, argued that only one premium payment is allowable per work day, regardless of the number or type of break periods that were not provided. The employee plaintiffs disagreed, contending that up to two premium payments per work day were permitted under the statute – one for failure to provide meal periods, and another for failure to provide rest periods.
The UPS Court’s Analysis
The trial court accepted the plaintiffs’ argument, and the Court of Appeal affirmed. Both courts’ analysis was based upon the language and history of section 226.7, enacted by the legislature in 2000. The court concluded that the legislative history proved the legislature intended to enact penalties equivalent to those set forth in wage orders issued by the California Department of Labor. Because those wage orders dealt with meal and rest break requirements – and consequences for violation – separately, the UPS court determined the legislature intended the same thing when it enacted section 226.7. In other words, multiple provisions, multiple penalties per day.
The court also relied upon an unreported federal district court case, also involving UPS, Marlo v. UPS, which had addressed the identical issue, and held that separate penalties could apply. Finally, the Court of Appeal acknowledged the remedial purpose of section 226.7, which justified a liberal construction to ensure employees received the maximum protection and benefit under the statute.
It is worth noting that the UPS case reaches the opposite conclusion that another Court of Appeal case (no longer published or citable) reached several years ago. That, combined with the California Supreme Court’s interest in employment cases, may portend further judicial activity on this issue.
Employer Action Items
If any employers needed additional reasons to make sure they comply with California’s wage and hour laws, UPS provides it. Employers need make sure their employees are provided, and ensure their employees take, meal and rest breaks according to the law (stay tuned for more on the provide/ensure issue, presently pending before the California Supreme Court). Employers should also ensure they (or their payroll vendors) have in place systems to automatically add up to two hours pay per day for an employee who misses meal and rest breaks.
Wise employers would also do well to consider periodic wage and hour practices audits, to ensure compliance and potentially provide a defense to additional penalties should a dispute arise. In this incredibly active area of litigation, an ounce of prevention is definitely worth a pound of cure.