A July 15 California Supreme Court ruling determined that employers are required to pay employees at the ‘Regular Rate of Pay’ when they fall noncompliant with mandatory employee meal- and rest-break periods.
As it stands, employees are entitled to one hour of pay for each day their employer is noncompliant with rest breaks and one hour of pay for each day of noncompliant meal breaks – that’s up to two hours of compensation per day. This additional pay is an employer penalty and is sometimes referred to as premium pay. The lawsuit arose when a bartender challenged their employer as to whether this compensation should be paid at the employee’s base hourly rate or at the ‘regular rate of pay,’ which is the standard calculation for overtime pay and factors in bonuses, commission, and other forms of premium pay. The judge, siding with the employee, ruled that it’s the latter.
With this new ruling, employers should consider taking the following actions to make sure they are in compliance and to prevent any violations and subsequent consequences:
Familiarize yourself with current rest- and meal-break laws
Make sure that the premium pay is not taxed as it is not time worked and is considered a penalty
Monitor rest- and meal-break practices to ensure employees are taking their breaks appropriately
Review your company’s current rest- and meal-break policies and ensure they and your company’s handbook are up to date
Understand how this ruling will impact any pending lawsuits and/or retroactive rest and meal break noncompliance payouts
If you need help reviewing your pay practices or have questions about how this might impact your business, reach out to The HR Manager today.