Premium Pay for Skipping Breaks
Time off, breaks & leaves
April 24, 2007
LawRoom.com
The California Supreme Court ruled that the "extra hour of pay" required by state law (Labor Code ¤226.7) when employees miss a rest or meal break qualifies as a type of "wage" rather than a "penalty."
The decision will have a significant impact on employment lawsuits, including:
- allowing employees a three (or four) year statute of limitations to collect wages, rather than the one year allowed to collect penalties
- allowing terminated workers who weren't paid the extra hour premium while employed to collect additional "waiting time" penalties
- requiring employers to pay for employees' attorney fees under Labor Code ¤218.5, which covers lawsuits involving wages but not penalties
- exposing employers to liability for punitive damages for not paying wages, a liability that doesn't exist if they don't pay a penalty
The Court ruled that the "extra hour of pay" was a type of premium compensation for employees who must work through a break. The Court noted that employers must pay similar types of premium compensation if employees work overtime, have a "split shift," or report to work but are sent home early ("show up" pay).
Thus, California employers are supposed to give workers meal and rest breaks - but if they don't, the employer must pay the "extra hour" premium. Basically, the premium pay requirement is intended to discourage employers from failing to provide breaks, just as overtime premium pay is intended to discourage excessive hours of work. [Murphy v. Kenneth Cole (CA 2007) no. S140308]
Note: In 2005, the Internal Revenue Service issued an opinion letter saying the "extra hour" premium was taxable whether it was considered a "wage" or "penalty."
Source: LawRoom.com
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