The COVID-19 shutdowns are over, for now, and business is booming after significant lay-offs and work-force reductions during the pandemic. As a result, as employees try to get back to work and as business is increasing, employers in every state are seeing an increase in wage and hour claims – whether it be a single plaintiff claim or a wage and hour class or representative complaint. The purpose of this article is to provide an update on the current state of the wage and hours laws for those employers that can still try to prevent these claims from exposing an employer to significant liability.
The most common wage and hour claims alleged by employees are the failure to properly provide meal or rest periods by employers. These claims are more easily prosecuted and proven because of the lack of accurate or compliant documentation. During a typical six or more hour shift, every hourly employee is entitled to meal and rest breaks. Because employers must ensure that these meal or rest periods are taken or are provided to employees without discouragement, it is sometimes difficult to document the circumstances of every meal or rest period for each employee.
The California Supreme Court in Donohue v. AMN Services, LLC, 11 Cal.5th 58 (2021) issued a unanimous opinion on February 25, 2021 addressing and resolving two issues regarding California meal periods. First, employers must ensure employees receive at least a 30-minute meal period and rounding meal period times to the nearest 30-minute period is not compliant with Labor Code section 512. As the Court pointed out, the applicable wage orders in California require employees to take a meal period that is “not less than 30 minutes.” Id. Therefore, premium pay (an extra hour of pay each day) is required for any meal period that is actually less than 30 minutes (of time actually taken for the break regardless of any rounding), and this meal break must be completed by the end of the fifth hour. In other words, employers are not permitted any rounding during the first 30 minutes for any employees for any meal breaks (i.,e., do not permit rounding from an attempted clock in period from 12:29 p.m. to 12:30 p.m.).
Second, the Court in Donohue set forth a rebuttal presumption of liability against the employer, even at the summary judgment stage, when the employee’s records do not demonstrate that a full 30-minute meal period was taken. In other words, if there are any time sheet records showing that at least a full 30-minute meal period was not taken during a shift of 6 hours or more, an employer must demonstrate, through admissible evidence, that the meal period premiums were paid or employees were provided meal periods which they voluntarily chose to shorten and work through. For most employers that have hourly paid employees, it is difficult to provide evidence of reasons for each missed full thirty-minute meal period.
This is the most significant case since the Brikner Case (Brinker Restaurant Corp. v. Superior Court), 53 Cal.4th (2021). In Brinker, the California Supreme Court held that an employer is not obligated to police meal breaks, but as long as the employee is relieved of all duties and relinquishes control over the employee’s activities to have the opportunity to take a 30-minute meal period, the employer complies with the meal break laws. The problem is what if the employee only takes a 25-minute meal break or clocks in early? Under Donohue, the rebuttal presumption is the employer is liable for the employee not taking the full 30-minute meal period.
What about rest periods? Rest periods typically play second fiddle to the meal period claims. However, given the strict compliance requirements of the meal periods, should employers require employees to clock in and out for rest periods? This reveals a double-edge sword situation in which employers desire to document rest periods, which has become easier with the advancement of technology. However, if an employee does not take regular rest periods, then the documentation will arguably show a potential violation. Rest periods are more easily defended because as long as employers provide them and do not discourage employee from taking rest periods, that ends their obligations.
On July 16, 2021, the California Supreme Court in Ferra v. Loews Hollywood Hotel, LLC, 11 Cal.5th 858 (2021), decided another important case on the issue of meal and rest periods, holding that employers are required to pay meal and rest period break violation premiums at the same regular rate of pay they use for paying overtime. In other words, employer cannot discount the regular rate of pay for break premium at the employee’s regular hourly rate. Employers must include in the pay rate calculation all wages and earnings including but not limited to piece-rate work, shift differentials, incentive compensation/commissions, and nondiscretionary bonuses.
What should employers do?
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