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

228 | 2022 Cal-Peculiarities ©2022 Seyfarth Shaw LLP  www.seyfarth.com attorney fees in a case claiming unpaid wages, but the California Supreme Court, in a case where the employer won and sought attorney fees, held that a claim for meal pay is not a claim for wages and that therefore the employer could not recover its attorney fees. (See § 5.12.)  Prejudgment interest is recoverable on a wage claim at the rate of ten percent per annum, under Labor Code section 218.6 . 290 I s the extra hour of pay subject to prejudgment interest? The answer is Yes, but the interest rate is the constitutionally provided rate of seven percent instead of the ten percent rate that Section 218.6 provides . 291  All earned wages are due upon discharge of employment . 292 I s the extra hour of pay a wage that must be paid by the time employment terminates? Though multiple Court of Appeal decisions have said No, the Supreme Court in a 2022 decision said Yes. (See § 7.5.3.)  Additional civil penalties might apply under PAGA (see § 5.15). Is the extra hour of pay itself a civil penalty or does PAGA create a civil penalty on top of the extra hour of pay? Some plaintiffs, as if to prove the axiom that “no good deed goes unpunished,” have sought PAGA penalties as to each meal premium an employer has paid, on a theory that the payments reflect employer admissions that the employer had failed to provide a meal period. Courts have disagreed on whether the extra hour of pay itself functions as a “civil penalty” such that PAGA would not create an additional civil penalty . 293 B ut even if an extra PAGA penalty applies with respect to unprovided meal or rest or recovery periods, an employer’s administrative practice of automatically paying premium pay for each short, later, or missed meal period would not be an admission that the employer had failed to provide a meal period. 7.10.3 Attorney fees Attorney fees denied for meal and restbreak claims. In 2020, the Court of Appeal held that claims for failure to provide meal and rest breaks are not claims “brought for the nonpayment of wages” within Labor Code section 218.5, which entitles the prevailing party to reasonable attorney fees. The Court of Appeal explained that the remedy for failure to provide meal or rest breaks is an additional hour of pay—often described in the case law as “premium wages”—but that does not turn a lawsuit for denied meal or rest breaks into a lawsuit for nonpayment of wages. Further, the plaintiff was not entitled to attorney fees under Section 203 (for waiting-time penalties) or Section 226 (for wage-statement penalties), either, because actions for failure to provide meal or rest breaks do not entitle employees to pursue derivative penalties under those section s. 294 7.10.4 Further issues involving the “one additional hour of pay” Extra hour of pay must be paid at the regular rate of pay. Until 2021, there was an open debate whether the additional hour of pay for noncompliant breaks must be paid at the usual hourly rate or regular rate of pay. Although Labor Code section 226.7(c) specifies a particular way to measure the extra hour of pay—the employee’s “regular rate of compensation”—plaintiffs argued that the proper measure is the “regular rate” used for overtime-pay purposes. The “regular rate” often will be higher than the usual hourly wage (as, for example, when an employee during a relevant workweek works some hours subject to a shift premium). At other times the “regular rate” will be lower than the usual hourly wage (as, for example, when an employee during a workweek gets a “controlled standby” wage, set at a low rate). Proponents of “usual hourly rate” cited the Legislature’s decision not to adopt the “regular rate” term of art, while choosing instead to adopt the phrase “regular rate of compensation.” The DLSE seemed to have agree d. 295 Then, in 2021, the California Supreme Court dealt yet another blow to employers, in Ferra v. Loews Hollywood Hotel. Ferra decided that the extra hour of pay must be paid at the regular rate of pay; that is, the employer must