Last year in Naranjo, the California Supreme Court held that meal period premium pay constitutes “wages” for purposes of derivative claims for (i) waiting time penalties under Labor Code section 203 and (ii) wage statement penalties under section 226.[i] Waiting time penalties may only be imposed against an employer in California when there is a “willful” failure to pay wages due at the end of employment, although a good faith dispute may negate such penalties. Similarly, wage statements penalties may only be imposed when, among other things, an employer “knowing[ly] and intentional[ly]” fails to provide a compliant, accurate wage statement. The California Supreme Court remanded the case to determine if the conditions were met for imposing such penalties.

After supplemental briefing, the Court of Appeal found that the employer did not willfully withhold wages when it asserted a defense that there was a good faith dispute that any wages were due. Although the plaintiff argued that the defenses were not in “good faith,” the Court concluded that such defenses were supported by evidence, even if the defenses were ultimately unsuccessful.

Regarding the penalties for failing to include the premiums on the wage statements, the Court held that the employer’s good faith belief that it was not violating California’s wage statement law precluded a finding of a knowing and intentional violation. Therefore, the court held that a good faith defense can be asserted against – and...

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