October 10, 2019 – Do meal period premiums trigger derivative liability for waiting-time penalties and inaccurate wage statements?
The National Law Review reports that the California Court of Appeal has ruled in the negative on the oft-asked question.
The Court has ruled that actions to recover unpaid meal period premiums under Labor Code section 226.7 do not entitle employees to derivative penalties under Labor Code section 203 (waiting time penalties) or section 226 (inaccurate wage statements).
This case marks a fundamental shift in the ability of employees to bring derivative claims for violations of sections 203 and 226, based solely on unpaid meal and rest period premiums. These derivative claims often are substantial and may be the “tail that wags the dog” in litigation. Employers should review and revise, if necessary, their timekeeping and payment policies and procedures for compliance.
The case― Naranjo et al. v. Spectrum Security Services, Inc., No. B256232 (Cal. Ct. App. Sept. 26, 2019)―also addresses an uncommon area of wage and hour litigation, namely the application of On-Duty Meal Period Agreements (ODMPAs), which, as stated by the Court of Appeal, are “a narrow exception” to traditional wage and hour rules.
Therefore, courts will carefully scrutinize an employer’s compliance with the technical requirements for an ODMPA. In this case, the Court of Appeal was not persuaded by Spectrum’s “substantial compliance.”
Employers who rely on an ODMPA are being advised to revisit their policies to ensure strict compliance.