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Wage or penalty? That is the current debate between employers and employees concerning the one-hour premium provided under Labor Code Section 226.7 for a meal or rest break violation. In California, an employer is required to authorize a ten minute paid rest break for all non-exempt employees at or before every four hours of work, and provide an unpaid thirty minute meal period for all non-exempt employees at or before every five hours of work. An employer who fails to comply with either of these requirements is required to provide an employee with an additional one hour of pay at the employee's regular rate of pay for each day a rest break is not authorized, and an additional one hour of pay at the employee's regular rate of pay for each day a meal period is not provided.
The importance of whether the one-hour premium under Labor Code section 226.7 is characterized as a penalty or a wage is significant for both employers and employees. If the one-hour premium is a wage, then the statute of limitations is three years (or up to four years under California's Business and Professions Code section 17200) and the employee can request waiting time penalties under Labor Code section 203. However, if the one-hour premium is a penalty, then the statute of limitations is only one year and waiting time penalties are unavailable, thereby drastically reducing the employee's damages.
In June 2005, the Department of Labor Standards Enforcement ("DLSE") issued a Precedent Decision in Hartwig v. Orchard Commercial, Inc., Case No. 12-56901RB, which held the one-hour premium under Labor Code section 226.7 is a penalty, not a wage. Since then, there have been conflicting decisions from the California Courts of Appeal. For example, in Murphy v. Kenneth Cole Productions, Inc. (2005) 13 Cal.App.4th 728, the First District Court of Appeal held that the one-hour premium is a penalty, not a wage; in Mills v. Superior Court (2006) 135 Cal.App. 4th 1547, the Second District Court of Appeal held the one-hour premium is a penalty not a wage; whereas the Fourth District Court of Appeal in National Steel and Shipbuilding Co. v. Sup. Ct. (2006) 135 Cal.App.4th 1072, decided that the one-hour premium is a wage. Notably, the court in Mills also stated that an employee is only entitled to one additional hour of wages, regardless of the number of meal or rest break violations in the day. This portion of the holding directly contradicts the DLSE's current interpretation of section 226.7 that an employee is entitled to a one-hour premium at the employee's regular rate of pay for any missed rest breaks and an additional one-hour premium at the employee's regular rate of pay for any missed meal periods in the same day.
The California Supreme Court has granted review of all three cases and is expected to issue an opinion sometime this year regarding the debate over whether the one-hour premium under section 226.7 is a wage versus a penalty, as well as whether an employee is entitled to a separate one-hour premium for meal break violations and rest break violations that occur in the same workday.
Jennifer D. Barrera is a 2002 graduate of the California Western School of Law, San Diego. In 2003, she joined Carlton DiSante & Freudenberger, LLP, where she practices employment law, providing counseling to employers as well as litigation defense.
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