Hourly workers in California who are not fully compensated for meal and rest breaks now have grounds to recover that shortfall following a recent California Supreme Court ruling.
On July 15, the California high court unanimously ruled in Ferra v. Loews Hollywood Hotel, LLC that workers who are not given meal or rest breaks during their shifts are entitled to premium payments that factor in all non-discretionary payments they receive, not just their hourly wages.
The lead plaintiff in the case, Jessica Ferra, worked as a bartender for Loews. The hotel paid her hourly wages as well as quarterly non-discretionary incentive payments.
California state law requires that employers provide their hourly employees meal and rest periods. Section 226.7(c) of the California Labor Code requires employers that do not provide compliant meal or rest breaks to pay their employees for one additional hour of premium pay at the employee’s “regular rate of compensation.”
In Ferra’s case, Loews paid workers who did not receive meal or rest breaks an additional hour of pay according to their hourly wage. However, the company did not factor in any non-discretionary payments in addition to the workers’ hourly wages, leading Ferra to file a class-action lawsuit against the hotel. She alleged the hotel violated state law by failing to pay for her noncompliant meal or rest breaks in accordance with her “regular rate of compensation,” which includes her bonus payments.
The trial court granted Loews summary adjudication after finding the hotel’s practice of calculating premium pay was proper. The Court of Appeal affirmed the ruling. Ferra appealed to the Supreme Court, which overturned the Court of Appeal’s decision.
The main question before the Supreme Court was whether the state legislature intended the phrasing “regular rate of compensation” under Section 226.7(c) to have the same meaning as the phrase “regular rate of pay” under another statute governing overtime payments, Section 510(a) of the California Labor Code.
Loews asserted that the language in Section 226.7(c) does not have the same meaning as the overtime provision, and only requires employers to pay an employee’s base hourly rate. The court disagreed, holding that the terms are synonymous, and that the phrasing “regular rate of compensation” “encompasses all non-discretionary payments, not just hourly wages.”
“This interpretation of section 226.7(c) comports with the remedial purpose of the Labor Code and wage orders and with our general guidance that the ‘state’s labor laws are to be liberally construed in favor of worker protection,’” said Justice Goodwin H. Liu, who wrote the opinion.
The court also determined the ruling should apply retroactively — leaving the door open for claims from workers for past improper payments.
If you need help understanding your legal options and protections in this area, contact Keller Grover for a free consultation. In more than 25 years litigating fraud and employment cases, the lawyers at Keller Grover have recovered hundreds of millions for clients and class members.