State’s high court rules on pay for work during lunch, breaks
Employees in California who are ordered to work through their halfhour lunch period or 10minute rest breaks are entitled to an extra hour’s pay at their “regular rate of compensation.” What that rate amounts to for the thousands whose regular pay includes commissions or bonuses wasn’t clear until Thursday, when the state Supreme Court ruled in the employees’ favor.
The case involved a former hotel bartender, Jessica Ferra, whose pay consisted of an hourly wage and a guaranteed additional “incentive” sum each quarter. For the days when she had to work during lunch or a rest break, her employer, Loews Hollywood Hotel, paid Ferra only the hourly wage and did not include a percentage of the quarterly incentive.
A Los Angeles judge and a state appeals court ruled in the hotel’s favor, saying an employee’s regular rate of compensation consists solely of hourly wages. On Thursday, the state’s high court unanimously disagreed.
The meal and rest break law, which dates from 2000, is similar to another California law entitling workers to 1½ hour’s pay for every overtime hour they work beyond eight in a day, Justice Goodwin Liu said in the 70 ruling. That law says the extra compensation is based on an employee’s “reg
ular rate of pay,” which courts have defined as all pay the employee customarily receives, including hourly wages, bonuses and other incentives.
A worker’s “regular rate of compensation,” the term in the meal and rest break law, is certainly no less than her “regular rate of pay,” Liu said. He said employees whose pay includes piecework — compensation based on how many products they can produce — are entitled to be paid the same as wageonly employees when they have to work through meal or rest breaks.
Past court rulings, Liu said, have established a policy of interpreting labor laws “liberally ... to favor the protection of employees.”
California law entitles most workers to a 30minute meal break after five hours, and to 10minute rest breaks every four hours.
Anticipating a possible unfavorable ruling, Loews, backed by employer groups, had asked the court to apply any such ruling only to future cases, saying it would otherwise cost employers millions of dollars. Liu said the hotel had offered no evidence for its claim — but even if it was accurate, the millions properly belonged to workers who had been denied their break periods.
The ruling is “a victory for workers,” said Dennis Moss, a lawyer for Ferra, whose classaction suit seeks compensation for all Loews employees in similar circumstances.
It will particularly help employees whose pay consists mostly of commissions added to their hourly wages, said Michael Rubin, a San Francisco labor lawyer who filed arguments in the case. Rubin said he and his colleagues have negotiated a multimilliondollar settlement for a group of bank consultants in a similar case now awaiting review by a federal judge in San Jose.
Faced with more severe penalties, Rubin said, employers will be “far more rigorous” in following rules for meal and rest breaks.
A lawyer for the hotel declined to comment on the ruling. An attorney for employer groups and the U.S. Chamber of Commerce was not available for comment.
The case is Ferra vs. Loews Hollywood Hotel, No. S259172.