As you probably know, California law requires employers to provide meal and rest periods to employees. For each work day in which a meal or rest period is not provided, the employer is required to pay one additional hour of pay at the employee’s regular hourly rate. While not terribly burdensome in isolation, the cost to employers for missed meal and rest periods can skyrocket if a class action lawsuit is brought on behalf of a significant number of employees who claim they were denied meal and rest periods over a long period of time.
Employer Requirements For Providing Meal And Rest Periods
Until recently, the law was unclear as to whether these payments were considered wages or penalties. The distinction is important because, if considered penalties, employees may only seek compensation for one year of missed meal and rest periods. If considered wages, employees may seek compensation for three years. The California Supreme Court recently ruled that such payments are considered wages, thus allowing employees to seek compensation for three years of lost meal and rest periods.
Pursuant to Division of Labor Standards Enforcement (DLSE) regulations, employees are entitled to an unpaid 30-minute, duty-free meal period after working for five hours, and a paid 10-minute rest period for each four hours of work. Furthermore, it is the responsibility of employers to actively ensure that employees are taking their required meal and rest periods, and are not working through them. Based on the potential liability regarding meal and rest periods, employers must not only actively ensure breaks are taken, but should keep accurate time records for all employees. In fact, employers are required to keep all time records, including records of meal periods, for a minimum of three years.
Payments For Missed Meals And Rest Periods Are Considered Wages And Subject To A Three Year Statute Of Limitations
In Murphy v. Kenneth Cole Productions Inc., the plaintiff was a store manager in a Kenneth Cole Productions retail clothing store. Murphy’s primary responsibilities were to make sales, receive or transfer products, process markdowns, and clean. Often, Murphy would eat lunch while continuing to work. Murphy regularly worked nine to ten hour days in which he was only able to take an uninterrupted, duty-free meal period once every two weeks. Murphy resigned after approximately two years of work. Subsequently, he filed a wage claim with the California Labor Commissioner for unpaid overtime and waiting time penalties, claiming that he was improperly classified as an exempt employee.
The Labor Commissioner issued a decision in Murphy’s favor. Murphy then asserted additional claims for lost meal and rest periods. The trial court ruled that the payments for meal and rest periods were wages and thus applied the three-year statute of limitations. The Court of Appeal reversed the decision, reasoning that the payments were penalties and thus subject to the one year statute of limitations. However, the California Supreme Court agreed with the trial court that payments for lost meal and rest periods were considered wages with a corresponding three-year period to bring such claims. The Court reasoned that the statute’s plain language, administrative and legislative history, and the purpose of the remedy all pointed to the conclusion that the additional hour of pay constituted a wage and not a penalty.
The Court compared payments for lost meal and rest periods to payments for overtime, and suggested that such payments have a dual-purpose remedy. The primary purpose of payments for missed meal and rest periods is to compensate employees. The secondary purpose is to serve as an incentive for employers to comply with labor standards. Since the main purpose of such payments is to compensate employees, the money should be defined as wages and is thus subject to the three year statute of limitations. Moreover, the Court explained that because employers are required to keep all time records for a minimum of three years, employers should have the appropriate evidence to defend against missed meal and rest period claims.
What This Means For You
The best defense against potential missed meal and rest period lawsuits is to proactively ensure that employees take the appropriate meal and rest breaks. Additionally, it is essential that employers keep detailed time records for their employees, including meals taken, for a minimum of three years. These preventative measures may discourage employees from filing such lawsuits altogether and, at the least, will allow you to defend yourself if such a lawsuit occurs.
Those of you familiar with this publication know that most of our articles deal with substantive issues in the area of employment law. In this article, we depart from that motif in order to provide a brief primer on a type of administrative proceeding that many of you may eventually have to face—cases before the California Labor Commissioner. Because these cases are relatively informal (and often involve low dollar amounts), it is not unusual to see both employees and employers handling the matters without the assistance of counsel. Given that, knowledge of the basics is desirable.
Who Is The Labor Commissioner?
The California Division of Labor Standards Enforcement (DLSE) is the state agency responsible for enforcing statutes, regulations, and orders pertaining to employee wages, hours, and working conditions. The DLSE is also the default organization for enforcement of all California labor laws when such enforcement is not explicitly delegated to another agency or entity. The DLSE’s executive officer is known as the Labor Commissioner. Upon receipt of a claim by an employee or representative thereof, the Labor Commissioner must (through DLSE employees and agents) investigate and take appropriate action against the employer. Such claims are often for items such as failure to pay overtime, failure to timely pay wages on termination, or failure to provide required benefits. However, given the breadth of DLSE responsibility, the range of issues brought before the commissioner is vast.
In conducting necessary investigations into employee claims, the commissioner has unlimited access to all workplaces within California, and any person who fails to cooperate in allowing such access or furnishing required information is guilty of a misdemeanor. The commissioner also possesses court-enforced subpoena power as to both documents and witnesses. Therefore, the Labor Commissioner and his agents may literally be thought of as the “employment police.”
How Do Proceedings Before The Labor Commissioner Work?
As stated, the Labor Commissioner has authority to investigate employee complaints and, depending on the issues raised via a complaint, may provide for a hearing. Actions involving wage recovery claims usually proceed through the hearing process.
After an employee files a complaint, the Labor Commissioner must—within 30 days—notify both the employee and employer regarding whether any further action will be taken. The commissioner can do one of three things. First, he can decide that the employee’s claim is facially meritless, and take no action. In such a case, no employer action is required, and the commissioner will transmit a letter to the parties indicating that the investigation has been completed. Second, and at the opposite end of the spectrum, the commissioner can himself pursue a civil action against the employer.
The third option is for the Labor Commissioner to hold an administrative hearing on the matter. If the commissioner chooses this option, he will notify the parties of the time and place of the hearing. Generally, the hearing must be held within 90 days of the commissioner’s notification. While the hearing may be postponed or continued if the commissioner finds the interests of justice warrant additional time, employers should in many cases think carefully before proposing or agreeing to a postponement. As noted above, many employee claims involve allegedly unpaid wages; in assessing back pay on a successful claim, the commissioner must calculate the amount of such pay from the time the claim is filed, not the date of the hearing. Thus, so long as an employer is prepared to substantively defend an employee’s claim, sooner is better. It should also be noted that an initial conference between the parties and the Deputy Labor Commissioner often takes place several weeks before the evidentiary hearing. At that meeting, the parties generally present their positions in an attempt to settle the matter. If no settlement is reached at or after that meeting, the evidentiary hearing will go forward.
The hearing itself is relatively informal. It is generally conducted in a conference room, not a courtroom, and is held before the Deputy Labor Commissioner, not a judge. Each party may call witnesses and present evidence. Hearings lasting more than a few hours are rare. Following the hearing, the Labor Commissioner will issue a written decision on the matter. A copy of that decision must be filed with the DLSE and served on the parties within 15 days after the conclusion of the hearing. As with a normal civil case, the commissioner’s decision can award the employee all, some, or none of the sought-after relief. This can include penalties and will include interest where back pay is awarded. The decision must include a statement of reasons supporting the result.
What Happens After The Labor Commissioner’s Decision Is Issued?
The Labor Commissioner’s decision must apprise the parties of their right to appeal the decision. If no appeal is taken, the commissioner’s decision becomes final. If either party wishes to appeal, they must do so within 10 days of the commissioner’s service of the decision. The appeal does not get submitted to another level of Labor Commissioner/DLSE review; instead, the matter is heard “de novo” in the appropriate California superior court. De novo review means that the matter is independently addressed by the superior court, and no deference is given to the Labor Commissioner’s ruling. If the employer appeals the commissioner’s award to an employee, it must post an undertaking in the full amount of the award. In the course of an appeal, the Labor Commissioner is permitted to represent employees who are unable to pay for an attorney.
If the losing party’s appeal is unsuccessful, the court may award the other party the attorneys’ fees and costs it incurred in defending the appeal. In cases where an employer appeals a decision and has the Labor Commissioner’s award reduced, the court may nonetheless give attorneys’ fees and costs to the employee so long as the court’s judgment does not completely negate the commissioner’s award. Indeed, for purposes of fees and costs on appeal, the governing statute (Labor Code section 98.2) goes so far as to say that an employee “is successful if the court awards an amount greater than zero.”
Proceedings before the Labor Commissioner are sufficiently common that employers should take care to educate themselves as to the fundamentals. The above discussion gives you some sense of what you may expect should you find yourself on the business end of an employee’s claim. For additional information on Labor Commissioner proceedings, you may visit the DLSE’s website at www.dir.ca.gov/dlse/dlse.html.