Yesterday, the California Supreme Court dealt a blow to California employers in its long awaited ruling in Murphy v. Kenneth Cole Productions (SC S140308). Contrary to the ruling of the lower court and numerous other appellate and trial courts, the Supreme Court held that the payment of “one additional hour of pay,” pursuant to California Labor Code § 226.7, for a missed meal or rest period is a premium wage, which is governed by a three-year statute of limitations, rather than a penalty, which is subject to a one-year statute of limitations.

Because wage claims in California are subject to Business & Professions Code § 17200, which has a four-year statute of limitations, the ruling that the additional hour of pay is a wage in effect increases the potential claim period to four years when employee lawsuits include a claim for violation of Business & Professions Code § 17200.

The Court also held that a trial court, which is conducting a new trial of wage claims initially presented to the California Labor Commissioner, can consider additional related wage claims not presented in the state administrative proceeding.

It is crucial for employers to ensure that all non-exempt employees are being provided, and are taking, their legally required meal and rest periods. In addition to confirming that your policies are compliant with California law, we suggest conducting periodic audits of employee time cards to ensure that employees have been timely taking and documenting the time they take off for meal periods. If an audit reveals that meal periods are either not being taken or properly documented, you should contact California employment counsel to address the issue immediately.