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Jun 02

United Parcel Service, Inc. v. Superior Court of the State of California for the County of Los Angeles

In a ruling directly impacting California employers, the Second Appellate District for the California Court of Appeals held that California Labor Code § 226.7 permits employees to recover up to two premium payment penalties per workday should an employer fail to provide mandatory meal and rest periods.  In United Parcel Service, Inc. v. Superior Court, 2011 Cal. App. LEXIS 682 (June 2, 2011), the Court rejected prior analysis emphasizing language in § 226.7 that an employee was entitled to only one premium payment regardless of the amount of breaks missed in a workday.

As California employers are acutely aware, both the California Labor Code and the Industrial Welfare Commission’s Wage Orders require employers provide employees who work a certain amount of hours in a workday both a meal period and a rest period.[1]  However, a dispute arose between the plaintiffs’ bar and defense counsel as to the amount of penalties available to an employee in situations where an employer failed to provide both a meal and rest break in a single day.  Employee rights advocates argued that the intent of the law was to provide a one hour penalty for each type of break an employer failed to provide, while employment groups stressed the language in § 226.7 that read an employee was entitled to one additional hour of pay for each workday limited the penalties available.

California Labor Code § 226.7 states, “If an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the Industrial Welfare Commission, the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.”  In Corder v. Houston’s Restaurants, Inc., 424 F. Supp.2d 1205 (C.D. Cal. 2006), the United States District Court for the Central District of California interpreted this language to limit the amount of penalties available to one hour of pay regardless of the number of breaks an employer failed to provide in any single workday.  Id. at 1207 fn. 2 (“§ 226.7(b) states that the employer is liable ‘for each work day’ that a break is not provided.  Thus, the plain wording of the statute is clear that an employer is liable per work day, rather than per break not provided”).

Rejecting this proposition, United Parcel Service relied on legislative history and the remedial nature of legislative enactments regarding the regulation of wages and hours to find that § 226.7 instead requires an one hour penalty for missed meal periods and a separate one hour penalty for missed rest breaks.  Relying on another Central District of California decision, Marlo v. United Parcel Service, Inc., 2009 U.S. Dist. LEXIS 41948 (C.D. Cal. 2009), the court in United Parcel Service found for the employees by relying on two grounds:  (1) legislative reference to the Wage Orders lent persuasive authority that the Wage Orders’ separation of meal and rest period requirements into two unique provisions required separate penalties for failing to provide meal and rest breaks; and (2) permitting a premium payment for failing to provide each type of break is in accordance with the public policy behind meal and rest break mandates protecting employee rights.

As such, UPS would suggest that employers may now be liable for two hours of additional pay as a penalty should they fail to provide a meal break and a rest break in a single workday solely because of the placement of a paragraph in the Wage Orders.  The added potential liability should UPS be found controlling encourages employers to take the proactive recourse of documenting rest periods as well as meal periods, even though the law does not require documentation of rest periods.  Rather, the California Labor Code requires employers keep records documenting employee meal breaks only.  However, should an employer determine that the fear of litigation outweighs the administrative hassle of paperwork, then strenuous recordkeeping of rest periods provides employers strong evidence as to the taking of breaks (or employee voluntarily refusal to take a break) so as to limit potential penalties arising from employee claims.

 [1] Employers in California must provide a 30 minute, undisturbed meal break before the beginning of the 5th hour of work (unless the workday is less than 6 hours and the employee expressly waives the meal period), and must also provide a second meal break if an employee works more than 10 hours in a single workday.  In regard to rest breaks, an employer must provide a 10 minute break to an employee for every 4 hours of work or major fraction thereof (unless the workday is less than 3.5 hours).  Whether an employer needs to “provide” a meal or rest break, or “ensure” that employees take such breaks, is an issue currently before the California Supreme Court pursuant to Brinker v. Superior Court and its progeny.

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