Employment Law Update

March 1, 2006

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EMPLOYERS BEWARE, It Remains Unclear Whether Meal and Rest Break Violations Are Subject To A One-Year or A Three-Year Statute Of Limitations

By Monica Sanchez

Within the past few months, three California Courts of Appeal have ruled on whether an employer’s failure to provide meal and rest breaks is a penalty, allowing an employee to recover for up to one year, or a wage, allowing employees to recover for a maximum of three years of breaks.  There is a serious controversy in California and the issue stems from the interpretation of Cal. Lab. Code § 226.7 (b).

As many California employers have found the hard way, “if an employer fails to provide an employee a meal period or a rest period in accordance with an applicable order [Wage Order], 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.”  Lab. Code § 226.7(b).

The primary issue the courts are trying to resolve is what statute of limitations applies to the payment referred to in Cal. Lab. Code § 226.7(b).  The answer therefore turns on whether the payment is primarily considered to be a penalty against the employers, allowing an employee to only recover for one year of missed meal and rest periods or a wage to the employee, allowing the employee to recover for three-years. 

Background

The latest decision came on January 27,2006, when California’s Second District Court of Appeal, in Mills v. Superior Court, (Case No. B184760) voiced their opinion in the ongoing controversy of whether meal and rest breaks are subject to a one-year or a three-year statute of limitation.  The Mills Court held that the remedy is a penalty that has a one-year statute of limitation.  The Mills holding came just one week after, January 20, 2006, the Fourth District Court of Appeals in National Steel and Shipbuilding Co. (NASSCO) v. Superior Court (Case No. D046692) held that meal and rest breaks are a penalty in the form of a wage to the employee, and therefore subject to a three-year state of limitations. 

Just in December 2005, the First District Court of Appeal in Murphy v. Kenneth Cole Productions, Inc. (2005) 134 Cal.App. 4th 728, in the fist published opinion that attempted to resolve this issue, held that meal and rest break violations are a penalty and subject to a one-year statute of limitations.  It is expected that the California Supreme Court will resolve all this confusion in Murphy, which petitioned for review by the California Supreme Court on January 11, 2006.  The court has 90 days from the date the petition was filed to decide whether to review the case.  The differences of opinions in three circuits makes it likely that the California Supreme Court will step in and resolve this issue.

In addition, on January 13, 2006, the California Department of Industrial Relations (DIR) announced that the Division of Labor Standards Enforcement (DLSE) would not file proposed regulations governing meal and rest periods with the office of Administrative law.  The DLSE instead decided to issue a new package of proposed regulations. 

The director of the DIR noted that the most critical component of the proposed regulations, governing the classification of payments made to an employee for failure to provide a meal and rest break, was resolved by the First District Court of Appeal in Murphy, holding the payment was a penalty, subject to a one-year statute of limitations period.  Further, after reviewing hundreds of comments, during the public comment period, it was decided that the DIR needed to fine-tune the regulations to provide better guidance for California employers and employees. 

What Employers Should Do

Every employer must comply with Labor Code § 226.7(a) which requires an employer to allow employees to take meal and rest breaks according to their specific IWC Wage Order.  Generally, employers must provide a rest break at the rate of not less than 10 consecutive minutes for each four hours (or major portion thereof) worked.  In addition, an employer must allow an employee to take a meal break of at least a half-hour for every work period of more than five hours.  However, if the proper waiver is in place, an employee may voluntarily choose not to take the meal break if six hours of work will complete the day’s work.  Employers who are not sure if they are complying with these requirements should contact an employment attorney immediately.  The potential fines for failing to provide mandatory breaks is very costly.

It is likely that the California Supreme Court will step in and resolve this debate.  Employers must continue to strictly comply with the meal and rest break requirements. In order to ensure that an employee is taking their meal break each day, an employer must require that their employees record the beginning and end of each meal period. 

Kring & Chung, LLP will continue to monitor the case law developments regarding meal and rest breaks. 

This article was prepared by Monica Sanchez, who is an associate at Kring & Chung, LLP’s Irvine and San Diego office. You can reach Ms. Sanchez at msanchez@kringandchung.com  or at (949) 261-7700.

** The information contained herein is for informational purposes only and should not be relied upon in reaching a conclusion in a particular area. The legal principles discussed herein were accurate at the time this article was authored but are subject to change with time. Applicability of these same legal principles may differ substantially in individual situations. Please consult an attorney before making a decision in a particular area using only the information provided in this article.