State high court meal break rulings mean changes for employers

For plaintiffs' attorneys, two state Supreme Court opinions that reinforced California's employee-friendly approach to meal and rest breaks this year seemed to signal a smoother path for representative actions and more like-minded rulings in the future. For defense attorneys who are used to navigating complex wage and hour laws in one of the most employee-friendly states in the nation, the opinions required a minor shift in what they advise clients, but are not exactly surprising.

Both sides agree, however, that employers would be wise to pay attention to the changes.

In Donohue v. AMN Services LLC, 2021 DJDAR 1797 (Feb. 25, 2021), the state Supreme Court ruled in February that employers cannot round employees' time punches for meal breaks up or down. The opinion also held that records showing that employees did not take the breaks they're entitled to raises a rebuttable presumption that the employer violated meal break laws.

In July, the high court meanwhile ruled in Ferra v. Loews Hollywood Hotel LLC, 2021 DJDAR 7156 (July 15, 2021), that employers must pay premiums for missed meal and rest breaks at an employee's regular rate of pay instead of their base hourly rate.

The second holding in Donohue, which presumes employers violate meal break laws when records do not show otherwise, seemed like a significant win for plaintiffs' attorneys looking to file representative actions, said sole practitioner Lauren Teukolsky.

"We on the plaintiffs' side thought that that ... holding would likely make it easier to certify meal break cases," Teukolsky said in an interview last week. "One of the big pieces of evidence that we submit to the court when we file a motion for class certification on a meal period claim is the time records, and we typically retain an expert to analyze the time punch data, and they come up with some rate of violation, like 75% of time entries show a non-compliant meal period."

The high court reaffirmed this holding in a roundabout way. In April, the 2nd District Court of Appeal issued an opinion in Salazar v. See's Candy Shops Inc. et al., which denied class status for employees with a meal break claim - even though the defendant did not give the employees a way to record whether they had taken a second meal break during long shifts. The plaintiff cited the rebuttable presumption held in Donohue. Salazar v. See's Candy Shops Inc. et al., 2021 DJDAR 4560 (May 10, 2021).

The high court depublished the Salazar opinion in August.

"The court doesn't explain why it orders cases depublished, but ... I would surmise that it disapproved of the way that the lower appellate court handled the rebuttable presumption," Teukolsky said.

For some defense attorneys, the impact of the high court's recent opinions is harder to pinpoint. "There's always a little bit of a lag ... as to whether a particular opinion really did motivate new lawsuits. It does appear that meal and rest periods are staying top of mind for plaintiffs," said Jennifer B. Zargarof, a partner at Morgan, Lewis & Bockius LLP. Some employment complaints "are so generically pled that you can't really tell what the issues are," Zargarof said, adding the impact of the high court's opinions have been more tangible in existing cases, where plaintiff's attorneys are amending their arguments.

After the Ferra ruling, for example, plaintiffs' counsel are looking more closely at the rate at which premiums are paid and "digging more into how it was calculated," she added.

Travis Gemoets, a partner at Jeffer Mangels Butler & Mitchell LLP, said the Supreme Court rulings merely "reaffirmed what I have always been telling my clients." For instance, "if a client had come to me and said ... 'I don't have to pay my meal period penalties at the regular rate of pay, I just have to pay it at the base rate,' ... I would say, 'No. No. No. The Supreme Court is going to change that.' Ferra was not surprising."

Gemoets said he could see the opinions possibly strengthening pending meal break lawsuits, but he said he could see Donohue, at least, "cutting both ways."

The opinion will likely push more employers to update their record keeping systems, so employees can record the reason they missed meal breaks. These updates would strengthen employers' defense in meal break claims, Gemoets said.

Michael D. Weil, a partner at Morgan Lewis, agreed the high court's rulings "put a spotlight on a company's record keeping practices."

Regardless, the rulings will likely motivate more meal and rest break litigation if they haven't already, Zargarof said.

"Whenever we see an appellate decision on meal and rest breaks, you see even more of a spike in claims - not necessarily because an employer has done anything wrong," she said. An appellate decision "creates a reason, I think, on the other side to test what it really means, to see if it can even be expanded."