©2024 Seyfarth Shaw LLP www.seyfarth.com 2024 Cal-Peculiarities | 309 an uninterrupted rest period of at least 10 minutes for every four hours worked or major fraction thereof, then the security officer shall be paid one additional hour of pay at the employee’s regular base hourly rate of compensation. “(2) For purposes of this subdivision, the term “interrupted” means any time a security officer is called upon to return to performing the active duties of the security officer’s post prior to completing the rest period, and does not include simply being on the premises, remaining on call and alert, monitoring a radio or other communication device, or all of these actions. “(3) This subdivision only applies to an employee specified in paragraph (1) if both of the following conditions are satisfied: “(A) The employee is covered by a valid collective bargaining agreement. “(B) The valid collective bargaining agreement expressly provides for the wages, hours of work, and working conditions of employees, and expressly provides for rest periods for those employees, final and binding arbitration of disputes concerning application of its rest period provisions, premium wage rates for all overtime hours worked, and a regular hourly rate of pay of not less than one dollar more than the state minimum wage rate.” 301 Thurman v. Bayshore Transit Mgmt., Inc., 203 Cal. App. 4th 1112, 1152-53 (2012) (disapproved of on other grounds by ZB, N.A. v. Superior Ct., 8 Cal. 5th 175 (2019)) (section 558 sets forth civil penalties for denied rest breaks); Brewer v. Premier Golf Props., LP, 168 Cal. App. 4th 1243, 1253-54 (2008) (section 558 establishes civil penalties for employers violating meal- and rest-break requirements). 302 Sanchez v. Martinez, 54 Cal. App. 5th 535, 547 (2020). 303 Lab. Code § 226.7(c). See IWC Wage Orders § 11(D) (meal periods), § 12(B) (rest periods). See also Lab. Code § 558(a) (civil penalty for violating IWC Wage Order). 304 United Parcel Serv. Wage & Hour Cases, 196 Cal. App. 4th 57, 69 (2011) (affirming trial court order that up to two premium payments are allowable per work day; “we believe it is more reasonable to construe [section 226.7] as permitting up to two premium payments per workday—one for failure to provide one or more meal periods, and another for failure to provide one or more rest periods.”). 305 Lab. Code § 226.7(e). 306 See, e.g., Mills v. Superior Ct., 135 Cal. App. 4th 1547 (2006) (recognizing penal nature of meal-period pay); Murphy v. Kenneth Cole Prods., Inc., 134 Cal. App. 4th 728 (2005) (same), rev’d, 40 Cal. 4th 1094 (2007); Caliber Bodyworks, Inc. v. Superior Ct., 134 Cal. App. 4th 365, 380 n.16 (2005) (same). A DLSE decision, Hartwig v. Orchard Commercial, Inc., DLSE Case No. 12-56901RB (2005), was effectively overruled by the California Supreme Court’s Murphy’s decision. The Labor Commissioner on occasion has designated an order, decision, or award as a Precedent Decision. See Gov’t Code § 11425.60. The Hartwig decision was the first to receive that special status. The Hartwig opinion fully reviewed the wage versus penalty issue and concluded that the additional hour of pay is indeed a penalty. The Murphy decision, however, makes Hartwig a dead letter. 307 Murphy v. Kenneth Cole Prods., 40 Cal. 4th 1094, 1099-1110 (2007) (affirming judgment to employee; “We conclude that the remedy provided in Labor Code section 226.7 constitutes a wage or premium pay and is governed by a three-year statute of limitations”). 308 Id. at 1103. 309 Bus. & Prof. Code § 17200. 310 Bus. & Prof. Code § 17200. 311 Naranjo v. Spectrum Sec. Servs., Inc., 13 Cal. 5th 93 (2022). 312 In a May 29, 2015 advice memorandum (which “may not be used or cited as precedent”), the IRS Office of Chief Counsel indicated that while section 203 (“waiting time”) penalties are not taxable as wages, section 226.7 payments may be: “[As to] … meal and rest period payments made under California Labor Code section 226.7[,] … if an employer fails to provide an employee a meal period or rest period in accordance with State requirements, the employer must pay the employee one additional hour of pay at the employee’s regular rate of compensation for each day that the meal or rest period is not provided. Because the meal and rest period payments are essentially additional compensation for the employee performing additional services during the period when the meal and rest periods should have been provided, it appears those payments are wages for federal employment tax purposes.” IRS Memorandum No. 201522004 at 6. 313 Lab. Code § 218.5. 314 Lab. Code § 218.6. 315 Naranjo v. Spectrum Sec. Servs., Inc., 13 Cal. 5th 93 (2022). 316 Lab. Code § 201. 317 Compare Ruelas v. Costco Wholesale Corp., 2015 WL 1359326, at *2 (N.D. Cal. Mar. 25, 2015) (granting employer’s motion for judgment on the pleadings “because Section 226.7(c) penalties do cover Section 512 meal-period violations, PAGA does not apply”) with Wert v. U.S. Bancorp, 2016 WL 1110302, at *4 (S.D. Cal. Mar. 22, 2016) (disagreeing with Ruelas and holding both statutory penalties under the Labor Code and civil penalties under PAGA could be recovered for the same violation). 318 Betancourt v. OS Rest. Servs., LLC, 49 Cal. App. 5th 240, 248, 252 (2020) (reversing attorney fees award to employee; “actions for nonprovision of meal or rest periods do not entitle employees to pursue the derivative penalties in sections 203 [waiting time] and 226 [wage statement violations]”; plaintiff did not sue “for nonpayment of wages, which is the necessary predicate for an award of fees under section 218.5”), overruled on other grounds by Naranjo v. Spectrum Sec. Servs., Inc., 13 Cal. 5th 93 (2022). 319 DLSE Enforcement Policies and Interpretations Manual § 49.1.2.4(9) (2002) (extra hour of pay for a meal period or rest break violation is in the nature of legally required premium pay and thus is not included in computing the regular rate of pay). 320 Ferra v. Loews Hollywood Hotel, LLC, 11 Cal. 5th 858, 863 (2021) (reversing summary judgment to employer; “We hold that the terms are synonymous: ‘regular rate of compensation’ under section 226.7(c), like ‘regular rate of pay’ under section 510(a), encompasses all nondiscretionary payments, not just hourly wages.”).
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