California court rules employer should report extra pay for missed breaks on wage statements

A guard for a San Diego-based security services firm was fired after leaving his post for a meal break

California court rules employer should report extra pay for missed breaks on wage statements

An employer who unlawfully makes an employee work during all or part of a meal or rest period should provide the employee with premium pay, or an additional hour of pay, under California’s Labor Code.

In Naranjo et al. v. Spectrum Security Services, Inc., the defendant was a San Diego-based company that offered secure custodial services to federal agencies and guarded and transported prisoners and detainees. It had a policy requiring custodial employees to remain on duty during all their meal breaks.

The plaintiff, employed as a guard, left his post to take a meal break. He was suspended and later fired, which prompted him to file a putative class action on behalf of the company’s employees. He claimed that the company did the following:

  • violated state meal break requirements under the Labor Code and under the applicable Industrial Welfare Commission wage order;
  • failed to report the premium pay on employees’ wage statements under section 226 of the Labor Code;
  • failed to timely provide the pay to discharged or resigning employees under sections 201, 202, and 203 of the Labor Code.

The plaintiff sought damages, penalties, and prejudgment interest. He asked for an additional hour of pay for each day on which the company failed to give the employees a meal break complying with the law.

Read more: Court rules that defunct California business owes workers premium pay

The trial court initially granted summary judgment in the company’s favor. When the Court of Appeal

reversed and remanded the case, the trial court certified a class and entered a judgment for the class on their meal break and wage statement claims.

The trial court awarded attorney fees and prejudgment interest at a 10% rate, as well as section 226 penalties since the company’s wage statement omissions were intentional. However, it did not grant section 203 penalties upon determining that the failure to make a timely payment was not willful.

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When both sides appealed, the Court of Appeal affirmed the trial court’s holding that the company violated meal break laws, but reversed its finding that a failure to pay meal break premiums could support claims under the wage statement and timely payment provisions. The appellate court reduced the prejudgment interest rate to 7%.

The Supreme Court of California reversed the appellate court’s judgment insofar as it determined that the failure to timely pay or to report section 226.7 premium pay could not support relief under sections 203 and 226. The Supreme Court remanded the case to the appellate court for further proceedings.

The extra payments for missed breaks were counted as wages, which should be reported on the required wage statements during employment under section 226 and which should be paid within the statutory deadlines when an employee has left the job under section 203, the Supreme Court ruled.

According to the Supreme Court, the extra pay aims to compensate both for the unlawful deprivation of a guaranteed break and for the work that the employee performed during the break period. Lastly, the 7% default rate set by California’s Constitution was applicable for the prejudgment interest for amounts due for failure to provide meal and rest breaks.

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