The correct method of calculating California meals and rest premiums hangs in the balance as California Supreme Court deliberates

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United States: Proper method for calculating California meal and rest premiums hangs in the balance as California Supreme Court deliberates

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Los Angeles, CA (May 26, 2021) – Ensuring that meal and rest periods are adhered to systematically plagues California employers, especially those with a large hourly workforce. In addition, employers looking to properly compensate employees for non-compliant meal and rest breaks face the daunting task of calculating premiums correctly. Currently, California law requires an employer to pay an employee a meal bonus of one hour’s wages at the employee’s “regular rate of pay”. (Cal. Lab. Code § 226.7) Last week, the California Supreme Court heard argument on the meaning of the “regular rate of compensation” with respect to meal and rest premiums.

On October 9, 2019, the California Court of Appeals answered the burning question: Does the “regular rate of pay” for calculating meal or rest bonuses have the same meaning as “rate of pay” regular pay ”for the calculation of overtime premiums? The tribunal, in Ferra v Loews Hollywood Hotel, LLC (Cal. App. 2019) B283218, held that unlike overtime premiums, meal and rest premiums can be paid at the regular hourly rate. In other words, incentive programs that are normally included in the regular rate of pay for overtime purposes (such as non-discretionary bonuses) are not included in the calculation of bonuses for meals and rest periods.

On January 22, 2020, the California Supreme Court granted the complainant’s request for review on the same issue: did the legislature intend that the term “regular rate of pay” in section 226.7 of the Labor Code be the same meaning and method of calculation as the term “normal rate of pay” under section 510 (a) of the Labor Code (regarding overtime)?

On May 18, 2021, the plaintiff in the class action lawsuit against Loews argued in the California Supreme Court that the legislature intended that the “regular compensation rate” used to calculate wage premiums for missed meals and periods rest periods have the same meaning (and therefore require the same calculation) as the “regular rate of pay” used to calculate the pay premium for overtime. The plaintiff’s main argument was that the ordinary meaning of the terms “regular rate of pay” and “regular rate of pay” are clearly the same and nothing in the word “pay” suggests that it means anything different or different. less than the word “Pay.” Accordingly, the Applicant asserted that she and the other Class Members are entitled to more than their basic hourly rate as bonuses for periods of meals and off duty.

The defendant, on the other hand, argued that “regular rate of pay” and “regular rate of pay” are two different terms, and the legislature has deliberately used a different term in the laws which both govern penalties for distinguish between different meanings. .

The California Supreme Court has yet to render its decision on the case. We are closely monitoring the case and will issue a follow-up client alert after court decisions. In the meantime, employers are encouraged to take stock of how they currently calculate meal and rest premiums so that they can make a quick change, if necessary, once the court rules.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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