In the recent case of Naranjo v. Spectrum Security Services, Inc., the Supreme Court of California ruled that providing extra pay, which is required when employees miss meal and rest breaks, can be defined as wages instead of penalties when looking at the California state labor code.
Because these payments are now defined as wages, they must be included when employers present pay statements. Additionally, they must be distributed promptly in the event of termination or an employee resignation; usually, that timeline looks like a turnaround of 72 hours or less. When an employer ignores this timeline, they can incure “waiting time penalties” and pay statement penalties, the court held. These penalties grow costly quickly and likely will be more expensive than just following the ruling’s stipulations.
The ruling applies only to California employers but will likely impact how other states treat similar claims from employees who have been wrongly denied meal or rest periods. It also highlights the importance of keeping accurate records of employee hours worked and breaks taken—a challenge that many employers struggle with due to frequent turnover or complicated computer systems that make it difficult to track time accurately.
The Naranjo ruling does not affect employers outside California. However, employers operating in California should be aware of the ruling and consider implementing various compliance programs. In light of this ruling, employers should take these steps to ensure they meet the court’s requirements:
The California Supreme Court recently announced a new ruling that will require employers to provide meal breaks and rest breaks for employees under specific circumstances.
The court ruled that employers must provide meal and rest breaks even if the employee is working on commission or is exempt from overtime under the federal Fair Labor Standards Act (FLSA) because of their duties.
This ruling creates an obligation for employers to track whether employees are taking all the required breaks, even if they are not working in California.
Employers should take pains to encourage payroll departments or third-party providers to follow the ruling in these ways:
Reinforce meal and rest breaks to avoid employees missing breaks from the start; this can be implemented in part with employee handbooks and clear policy expectations.
Provide a waiver form in the event of consensually-waived breaks so that both employers and employees are on the same page.
Consider calculating missed-break payments into the regular rate of pay when processing overtime.
It might be helpful to provide an opportunity for employees to record that they did in fact receive all the breaks required, just so that in the event of needing a defense against claims, you have a semi-helpful shield from liability.
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