(April 17, 2007) A ruling yesterday by the California Supreme Court settles a question about meal/rest period violations to the detriment of employers and highlights the need for reforms.

In a long awaited decision, the state Supreme Court ruled that the amount paid to a worker by an employer for failing to provide a worker a meal break is a wage, not a penalty.

The Supreme Court decision was the final stop in the case of Murphy v. Kenneth Cole Productions, Inc., the leading case on the issue of whether the statutory payment required under Labor Code Section 226.7 for failure to provide a rest or meal break is a penalty or a wage.

Read the opinion.

Impact
The court’s decision increases an employer’s liability by establishing a three-year statute of limitations for employees to sue about an alleged violation of the requirement that employers provide a rest or meal break. Accordingly, the impact of this case is enormous due to the number of lawsuits pending in California seeking payment under Section 226.7.

Class action claims for meal and rest period violations have been on the rise because of the potential for substantial monetary payouts arising from per-day, per-employee penalties.

The CalChamber’s arguments, presented to the court in March by attorney Steve Drapkin, cited 100 years of California case law as clearly pointing to the payment requirement as being a penalty and not a wage. In addition, legislative discussions leading to the adoption of the payment requirement identified it as a penalty, as did later proposals to amend that section of the law.

In order to reduce an employer’s liability, the CalChamber believes legislation is needed to clarify what an employer must do to ensure that an employee takes the required meal or rest period.

As a result of the decision, employers must treat the payment owed for a missed meal period as a wage and pay the employee the statutory amount.

Compliance Help
In the wake of this ruling, it is more important than ever that employers be diligent and fully comply with the law. The following CalChamber products can help employers understand the law and comply:

• Compensation 201 Live Web Seminar shows businesses how to create a competitive base salary compensation program. CalChamber’s expert guidance gives businesses the knowledge needed to attract and retain a competent workforce while staying competitive in the labor market.
• Employee Handbook Software helps businesses create an employee handbook in minutes. Clicking through the Wizard’s brief set of questions automatically creates a customized employee handbook that’s compliant with California and federal labor laws.
• Labor Law Digest is the most comprehensive resource available for both California and federal labor law. The two-volume digest is written in plain English and has helpful charts, case histories and discussions showing where federal and state laws intersect, while delving into all areas of compliance.
• HR Handbook for California Employers is presented in an easy-to-read, question-and-answer style, HR Handbook focuses on steps to follow, forms to use and helpful checklists.

For more information, visit www.calbizcentral.com.

Staff Contact: Erika Frank