The California Supreme Court, in Naranjo v. Spectrum Security Services, Inc., recently determined that meal and rest period premium payments are subject to the final pay timing requirements of Labor Code section 203 and the wage statement reporting requirements of Labor Code section 226(a). In addition, the prejudgment interest rate for violating any of these sections is 7%. In essence, the ruling means that these premiums may trigger derivative wage statements and waiting time penalties.
Can your employee seek “wages” without bringing or pursuing claims for nonpayment of those wages? According to Naranjo and the California Supreme Court, the answer is yes. The court held that meal and rest premium payments – which occur when an employee either misses or takes a late or short meal/rest break – are wages and subject to the wage statement and final pay requirements. This is, in general, a win for the plaintiffs bar, as the premiums are now considered wages, meaning they compensate an employee for the missed break and for the work performed during the break. But was any of this ruling good for the employer? Yes – the court did decide that the prejudgment interest rate is 7%, and not 10%.
What does Naranjo mean for you as an employer? At this early juncture, the safest and best course of action would be to separately list out each employee’s meal and rest premiums and ensure the wage statements are paid in a timely manner. These premiums must be listed on the wage statement. Even further, employers should consider having employees sign off that they received their premium pay. The court was unclear whether this decision is retroactive. As a precaution, employers should make every effort to be in compliance with this new ruling.