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Out to Lunch: Two 2021 California Supreme Court Decisions Employers Need to Know

| Jul 16, 2021 | California Supreme Court, Employment Law, Meal Periods

Ferra v. Loews Hollywood Hotel (July 15, 2021, S259172) ___ Cal.5th ___.

The California Supreme Court recently held that the, “regular rate of compensation” for the purposes of meal and rest period premium payments under Labor Code § 226.7(c) was synonymous with the, “regular rate of pay” for overtime pay calculation under Labor Code § 510(a).  The consequence of this decision is that when employers calculate meal period or rest period premium pay amounts, they must also include nondiscretionary compensation, such as non-discretionary bonuses or piece-rate pay, to calculate the “regular rate of compensation” due as a meal period premium or rest break premium in a similar fashion to calculating the “regular rate of pay” for overtime purposes.

Donohue v. AMN Services, LLC (2021) 11 Cal.5th 58.

In a decision earlier this year, the California Supreme Court made two holdings regarding meal periods and rounding.  First, the Supreme Court held “employers cannot engage in the practice of rounding time punches…in the meal period context.”  Second, the Court held that where the time records show non-compliant meal periods (e.g. less than 30 minutes, after the end of the fifth hour of work, etc.), a rebuttable presumption of meal period violations arises.  Employers can rebut this presumption by presenting evidence that employees were compensated for noncompliant meal periods or that they had in fact been provided complaint meal periods during which they choose to work.

If you have questions about compliance with the new rulings or would like general advice, please contact the attorneys at Sagaser, Watkins & Wieland, P.C.