Failing To Pay Employees Premium Wages For Missed Meal and Rest Periods Could Cost Big

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In Safeway, Inc. v. Superior Court (Esparza), (C.A.2nd B255216) (L.A. Superior Court Case No. BC487830), published July 22, 2015, the California Court of Appeal for the Second District upheld a trial court’s class certification for a class of approximately 200,000 grocery store workers who claimed that the practice of Safeway, and its sister company Vons (“Safeway”), of never paying compensation under Labor Code §226.7 (“premium wages”) for missed meal and rest breaks constituted a violation of California’s Unfair Competition Law, Business and Profession’s Code §17200, et seq. (“UCL”). While the Court of Appeal indicated it was only ruling on the class certification issue, and not whether Safeway’s practices did in fact constitute an unfair business practice, the Court concluded that Safeway’s blanket policy of not paying employees a premium wage for a missed meal or rest period could support an unfair competition claim.

In arguing against class certification, Safeway contended that since it did in fact provide meal and rest periods, its failure to pay a meal period premium could only be established by asking each employee why a break was missed, short or taken late. Safeway argued that class treatment was inappropriate since there was “absolutely no evidence of a companywide policy or practice of depriving employees of meal periods.” In the absence of a pervasive pattern, Safeway argued that commonality necessary to certify a class did not exist.

Plaintiffs claimed that they were not required to prove that each class member had a meal or rest break claim. The plaintiffs were not seeking premium wages owed to individual class members, but rather were seeking restitution under the UCL for the loss of “compensation guarantee and enhanced enforcement” provided by Labor Code §226.7. The “unfair act” common to all employees was not the failure to pay individuals for missed rest and meal periods, but rather Safeway’s decision never to pay premium wages under any circumstances. Plaintiffs pointed to Safeway’s time records to show that Safeway never made a premium wage payment.

The Court of Appeal agreed with the plaintiffs. The Court found that an unfair labor claim “may be predicated on a practice of not paying premium wages for missed, shortened, or delayed meal breaks attributable to the employer’s instructions or under pressure, and unaccompanied by a suitable employee waiver or agreement.” Safeway’s apparent decision never to pay premium wages for missed meal or rest periods was in the Court’s opinion, sufficient to allow certification of class members to seek the value of “class-wide loss of the statutory benefits” provided by Labor Code §226.7 under the UCL.

The Court’s holding is a reminder to employers to audit their time record keeping practices to confirm that breaks are being properly recorded by their employees. Employers should also review their employee handbooks to make sure they comply with the latest meal and rest break rulings, ensure that employees sign an acknowledgement of the policies, and enforce those policies and procedures in a consistent manner. Finally, if an employer becomes aware that an employee has missed his/her meal and/or rest break, it should promptly pay the employee an additional hour of pay at the employee’s regular rate of compensation for each meal and/or rest period not provided. If the employee misses both a rest and meal period in the same day, two hours of premium pay will be due.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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