California Supreme Court Increases Premium Pay for Missed Meal and Rest Breaks

On July 15, 2021, the California Supreme Court clarified the calculation for the additional hour of so-called premium pay whenever an employer fails to provide an employee with a compliant meal or rest/recovery period. Ferra v. Loews Hollywood Hotel, LLC (Ferra).

Labor Code 226.7 directs an employer to give a nonexempt (hourly) employee within the same pay period an additional hour of premium pay at the “regular rate of compensation” for any missed, shortened or late meal or rest/recovery breaks due to unavoidable operational circumstances.

While employer Loews claimed the premium pay should constitute an additional hour of straight hourly wages, the Ferra court ruled the calculation akin to the overtime “regular rate of pay” (Labor Code 510(a)), factoring in all compensation sources (e.g., commissions, bonuses as well as hourly wages). The court applied its decision retroactively subject to any applicable statute of limitations.

Accordingly, California employers should:

• Revisit meal and rest break policies and practices to confirm compliance;
• Train all supervisors and managers to comply with meal and rest/recovery obligations;
• Have non-exempt employees regularly sign attestations that will flag any improperly provided breaks;
• Ensure payroll personnel properly calculate and timely issue all premium payments at the correct pay rate – not just the hourly rate; and
• Consider working with experienced legal counsel on auditing prior pay practices and making any necessary remedial adjustments.

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• Good Workplace Policy is Boss – Our Template Handbook & Forms for 2021 (May 28, 2021)
• Please: Document Workplace Meal Breaks – Require Employees to Clock Out and Back In on Their Meals (June 4, 2021)
• The Basics of Overtime – Five Rules for California (April 27, 2018)
• Do the Math – California Supreme Court Sets Out New Formula for Overtime – When “Flat Sum” Bonuses Paid (March 22, 2018)

Cindy Bamforth
August 6, 2021