California Supreme Court strikes blow to employers concerning meal break premium payments

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On May 23, 2022, in Naranjo v. Spectrum Security Services, Inc., the California Supreme Court settled an open question concerning the nature of the meal break premium employers owe to employees when they miss a meal break. It held that they are wages, must be disclosed on the wage statement and must be accurately paid out on the final check. Furthermore, in the event they are not accurately paid, the employer can be liable for waiting time penalties. Finally, the California Supreme Court clarified the rate of pre-judgment interest that applies (7%) to failure to comply with these requirements.

This holding is important to employers for the following reasons:

  • It adds another requirement for the payroll department to ensure that even the inadvertent missed reporting of meal premiums is accurately reflected on wage statements to avoid liability under Labor Code section 226. This requires additional diligence by payroll and coordination with managers to ensure that premiums pay is accurately captured on wage statements.
  • As monitoring employee meal breaks has always been a challenge, additional scrutiny of timekeeping practices is required to ensure that employees are paid a premium for missed or late meal breaks so the employer can comply with this reporting requirement and reduce risk.
  • Now employers must ensure that when an employee leaves a job, the departing employee’s premium pay is properly paid out to the employee under the applicable statutory framework or risk owing waiting time penalties to employees.

Naranjo is a blow to employers that has opened new avenues for employees and plaintiff’s attorneys to manufacture Private Attorney General Act (PAGA) claims on a representative basis and seek class relief through a class action.

California’s wage and hour laws have always posed significant liability to employers. Naranjo increases the vigilance that employers must have to be sure they are following the law and to ensure that inadvertent errors to not lead to substantial liability.

Scali Rasmussen’s labor and employment attorneys stay abreast of the latest developments in California and federal law. The firm’s attorneys can assist employers with compliant California and federal timekeeping policies, along with workplace investigations, payroll audits and employment litigation, whether class action, PAGA, and single plaintiff cases.