On December 22, 2016, the California Supreme Court reinstated a trial court’s award of $90 million against a security company, ABM Security Services, Inc. ("ABM"), for violating California’s rest break laws. (Augustus v. ABM Security Services, Inc. (2016) 2016 WL 7407328.) The Court departed from prior case law and adopted a blanket rule prohibiting all on-duty and on-call rest breaks, regardless of the level of control exercised by the employer during rest breaks. The Court further held that ABM’s policy of requiring security guards to keep their pagers, radios and phones on and to respond to calls when needed, deprived ABM’s security guards of duty-free rest breaks in violation of California law.

California’s Rest Break Requirements California Labor Code section 226.7 and Industrial Welfare Commission ("IWC") Wage Orders require employers to authorize and permit employees to take an uninterrupted, 10-minute rest break every 4 hours worked or major fraction thereof. The California Supreme Court previously interpreted these laws to require employers to provide one 10-minute rest break for shifts from 3½ to 6 hours in length, two 10-minute rest breaks for shifts lasting more than 6 hours to 10 hours, three 10-minute rest breaks for shifts lasting more than 10 hours to 14 hours, and so on. (Brinker Restaurant Corp. v. Superior Court (2012) 139 Cal.4th 1004, 1029.) Rest breaks must also fall in the middle of each work period insofar as it is practicable.

The Battle over On-Call Rest Breaks The battle over on-call rest breaks began in 2005, when several ABM security guards initiated class action litigation challenging ABM’s policy of requiring security guards to "keep their radios and pagers on" and "remain vigilant" when needs arose, such as escorting tenants to parking lots, notifying building managers of mechanical problems, and responding to emergency situations. Despite the lack of evidence that any of the class members were actually deprived of any rest breaks, the trial court granted summary judgment in favor of the security guards because ABM’s rest break policy required security guards to carry pagers and radios and respond to work-related calls when necessary. The trial court awarded the employees $90 million in wages, penalties, and interest.

The California Court of Appeal reversed the trial court’s decision on the grounds that California law does not require employers to provide "off-duty" rest breaks and that "simply being on call" while on a rest break does not deprive the employee of the rest break required by California law. The California Supreme Court reversed the Court of Appeal, holding that California law prohibits on-duty and on-call rest breaks and requires employers to relieve their employees of all duties and relinquish any control over how employees spend their rest breaks.

The Analysis The Supreme Court rejected on-duty rest breaks based on its interpretation of Labor Code section 226.7, the IWC Wage Orders, and the Division of Labor Standards Enforcement’s ("DLSE") interpretation of the Labor Code and the Wage Orders. Specifically, the Court held the "plain" and most "common sense" meaning of subdivision 12(A) of Wage Order 4 requires employers to provide rest breaks that are entirely free of labor, work, or other employment-related duties. Labor Code section 226.7 also expressly prohibits employers from "requir[ing] any employee to work during any meal and rest period." Accordingly, even though subdivision 11(A) of the Wage Order requires employees to be "relieved of all duty" during meal breaks and there is no similar language relating to rest breaks in subdivision 12(A), the Court determined the overall intent of the Legislature was to require employers to provide meal and rest breaks free from employer control.

The Court further concluded that the IWC could have carved out an exception for on-duty rest breaks if such breaks were intended. Subdivision 11(A) of Wage Order 4 expressly creates an exception for on-duty meal breaks when the nature of the work prevents an employee from being relieved of all duty and other conditions are met, and subdivision 12(C) of Wage Order 5 allows employers to provide on-duty rest breaks without penalty for certain caregivers in the public housekeeping industry. As neither the Labor Code nor any IWC Wage Order carves out an exception for on-duty rest breaks, the Court determined there was no legislative support for on-duty rest breaks.

The Court then extended this rationale to categorically prohibit on-call rest breaks, including those rest breaks where the employer merely requires an employee to carry portable communication devices and be available in the event of an emergency. The Court held that such on-call arrangements, in conjunction with the practical limitations of a short, 10-minute break, inherently constrain employees from using their rest breaks for their own purposes and fail to satisfy an employer’s obligation to provide duty-free rest breaks. In reaching this conclusion, the Court ignored prior case law and interpretive guidance from the DLSE which generally provided that compensable on-call time depends on the level of control exercised by the employer and that the mere act of requiring an employee to carry a pager or other communication device, alone, did not constitute time worked by the employee.

How Can Employers Avoid Rest Break Violations and Collective Actions? While this case originated with security guards who carry pagers, we expect it will have much broader implications for employers. Undoubtedly future appellate decisions will further define the scope and parameters of this decision, but in the interim, employers should closely evaluate their rest break policies and practices. In particular, employers should eliminate any policies or practices that (a) require non-exempt employees to remain on-call during rest breaks, (b) wear and respond to portable communication devices while on rest breaks, or (c) impose any other requirement that could potentially interfere with their ability to use their rest breaks for their own purposes. For example, many employers use handbooks that require employees to remain on the premises during rest breaks, but in the wake of this decision these policies may now be illegal.

Employers of drivers who spend most of their work day on the road should reevaluate their rest break policies to ensure drivers are relieved from all work duties while on their rest breaks. Employers who provide pagers or cell phones to employees may consider policies such as requiring employees to turn off the devices while on rest breaks and to forbid employees from taking work-related phone calls while on rest breaks. If employers are unable to schedule rest breaks without requiring employees to remain on-call or be available to respond to emergencies, they face a rest break penalty. Those employers should evaluate whether the 1-hour penalty should be automatically paid to those employees. Finally, all employers whose employees spend a majority of their work day on the road or away from a single location should consider applying for a rest break exemption through the DLSE with the assistance of experienced legal counsel.