Supreme Court Determines that Premiums Paid for Meal and Rest Break Violations are considered "Wages"
June 16, 2022
When an employer fails to provide a non-exempt employee with uninterrupted meal or rest breaks, the employer must pay the employee one extra hour of pay at the employee's regular hourly rate, also referred to as a "premium" pay. Until recently, it was unclear whether the "premium" pay was considered a penalty or a wage. In a much anticipated decision, the California Supreme Court recently ruled that premium payments owed for meal and rest break violations constitute "wages." So why is this important for employees?
(1) Labor Code section 226 requires employers to provide employees with itemized and accurate wage statements (i.e. paycheck stubs). Thus, if an employer fails to compensate an employee with premium pay for meal and rest break violations, or if an employer fails to report the premium pay to its employee on his/her wage statement, then the employer would also be in violation of Labor Code section 226, resulting in additional penalties to the employee.
(2) Labor Code section 203 provides for penalties to employees who are not paid all wages due at the time of their termination, or within 72 hours of their resignation. Thus, if an employer fails to compensate an employee with premium pay for meal and rest break violations prior to his/her termination or resignation, then the employee will be entitled to "waiting-time penalties" pursuant to Labor Code section 203.
The California Supreme Court's recent ruling is another step towards protecting employees in the workplace.