Almost exactly one year ago, the California Supreme Court issued its decision in Gustavo Naranjo v Spectrum Security Services, Inc. (“Naranjo”), reviewing a decision by the Second Appellate District (the “Appellate Court”) in 2019. As we discussed in our California Employment News episode at that time (available here on YouTube, or here on our podcast) and here on our blog, the Supreme Court’s decision opened the flood-gates for employees to recover waiting-time and wage statement penalties whenever meal or rest period premiums went unpaid. This ruling immediately hyper-inflating the value of many wage and hour class actions across the state. On remand, the Appellate Court halted this inflation in some instances by clarifying that such penalties are not available to a class of employees where the employer has a good faith dispute that the premiums were due.
The Supreme Court’s Decision and Remand
First, a quick summary of the Labor Code sections at play: Under Labor Code section 226.7, whenever a meal or rest period is required but is denied by the employer, a “premium” of one hour’s pay is owed to the employee. Wage statement violations under Labor Code section 226 occur when employers “knowingly and intentionally” do not accurately state the gross “wages” earned by employees on their wage statements. Waiting-time penalties under Labor Code section 203 must be paid by employers when they “willfully” fail to pay all “wages” due to departing employees. Before the Supreme...
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