Cal-Peculiarities: How California Employment Law is Different 2022 Edition

©2022 Seyfarth Shaw LLP  www.seyfarth.com 2022 Cal-Peculiarities | 227 they went unpaid, in addition to the “additional hour of pay” they were entitled to under Labor Code section 226.7. The Court of Appeal held that the trial court properly awarded damages under only one of the two theories asserted. Although both theories were legitimate, the rule against double recovery precluded awarding money under both theories. Plaintiffs were entitled to pay only once for each injury suffered. Although the trial court should have allowed plaintiffs to choose their route for recovery, they were not prejudiced in being forced to accept damages under the statute (the extra hour of pay), which maximized their recover y. 278 7.10 The “One Additional Hour of Pay” A California employer that “fails to provide an employee a meal or rest or recovery period in accordance with a state law” must “pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest or recovery period is not provided. ” 279 T he Court of Appeal has held that an employer that fails to provide both a meal period and a rest period must pay up to two premium hourly payments per work da y. 280 The foregoing does not apply to employees who are exempt from meal, rest, or recovery period requirements “pursuant to other state laws. ” 281 7.10.1 Pay is characterized as a “wage” for purposes of the limitations period The extra hour of pay—a fixed amount due regardless of how long work intrudes into the meal or rest break— resembles a penalty in that the payment does not correspond to the amount of break time denied. As discussed below, “penalty” is the legal characterization that employer-defendants have preferred. And in fact 22 of the 24 Court of Appeal justices who considered the issue agreed with the employers’ view that the extra hour of pay is indeed a penalt y, 282 as did the DLSE in a Precedent Decision . 283 In 2007, however, the California Supreme Court, in Murphy v. Kenneth Cole Productions , erased all of that pro- employer authority by ruling, unanimously, that the extra hour of pay is what the plaintiffs always said it is: a “premium wage. ” 284 Murphy justified its result with repeated references to the California rule that “statutes governing conditions of employment are to be construed broadly in favor of protecting employees, ” 285 even though the relevant provision, a statute of limitations, appears not in the Labor Code but in the Code of Civil Procedure. 7.10.2 Potential implications of treating meal payments as wages Murphy ’s decision to characterize the extra hour of pay as a wage implicated several issues:  The limitations period for a wage claim is three years (for violation of a statutory obligation to pay wages) instead of the one-year period for a penalty claim. Murphy held that the limitations period for a meal-pay claim under the Labor Code was three years. (And the period could be four years when plaintiffs sue, as they typically do, under the Unfair Competition Law as well.)  Restitution for unpaid wages is available under California’s Unfair Competition Law , 286 w ith its four-year statute of limitations. Is the extra hour of pay subject to recovery as restitution? One might think the correct answer is No, as the extra hour of pay is a wage earned through labor. But the Supreme Court in 2022 held that meal premiums—due because of meal-period violations—indeed are “earned wages. ” 287  Tax withholding and employer taxes would be required on payments of wages. Does the extra hour of pay amount to wages for tax purposes? (The IRS has suggested that the answer is yes. ) 288  Attorney fees are recoverable for a wage claim . 289 W ould a claim for the extra hour of pay entitle the prevailing party to attorney fees? California does have a Labor Code provision authorizing the award of