On May 23, 2022, the Supreme Court of California held California’s one-hour penalty pay for missed meal and rest breaks constitutes “wages” and therefore is subject to the same reporting and timing rules as other forms of compensation. For employers with nonexempt employees in California, this means the one-hour penalty pay must be: (a) reported on employees’ regular paystubs as hours worked and wages earned, and (b) paid within the timeframe for paying final wages upon separation from employment. The case in which the Court made this determination is called Naranjo v. Spectrum Security Services, Inc. A copy of the Court’s opinion can be accessed here.
A. Breaking down the Court’s implications
To be sure, California employees always have been able to sue for missed meal and/or rest breaks. But the Court’s decision identifies new implications for employers. First, separated employees can now sue employers who do not pay the one-hour penalty pay for missed meal or rest breaks for what commonly are called “waiting time penalties.” This remedy would be available to employees even if their employer timely pays all other wages due at separation. Second, those employees would have viable claims under California’s wage statement law if their employer also fails to include the one-hour penalty pay on employees’ paystubs. Both the waiting time penalty and wage statement laws impose monetary penalties for violations (the wage statement law also contains a fee shifting provision,...
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