Missed break premiums count as wages, State Supreme Court rules

For just over a decade, California courts were confused about whether the extra hour's pay employers must give workers for denying them a proper meal break count as wages or simply as penalties. Last May, the Supreme Court firmly answered the question: it's both.

Winning that ruling only took the employees' attorneys representing a few hundred security guards 16 years.

The lawsuit was filed in June 2007. It's first trip to the state Court of Appeal was in 2008, with an opinion in 2009. The trial, conducted in three phases, took a total of about 20 days and stretched over seven months in 2013. "One of the remarkable things about the case is that it is a wage-and-hour class action that was tried to a jury," plaintiffs' attorney Jason Marsili said. "That is a rarity in the state of California."

In their lawsuit, the security guards complained that they were forced to stay on duty during their meal breaks and so were due an hour of extra pay for each faulty break. The dispute was whether their employer had to report that "premium pay" on the guards' wage statement and whether it had to pay those wages to the guards at least by their last day on the job, as required by a pair of Labor Code sections.

Because the company didn't do either, the plaintiffs' class asked for and won additional statutory penalties and attorneys' fees.

Both sides appealed the jury verdicts in May 2014. But the court's opinion didn't arrive until September 2019. "We were at the Court of Appeal for four years," Marsili said. The case had "a very large, complicated record," partner Howard Rosen said.

The appellate panel reversed because it held that the two code sections only apply to "wages," while the hours of premium pay were penalties for "the employer's recalcitrance."

Marsili said he and his team believed the appellate court had not considered the issue properly. "The opinion was very abrupt" on that point, he said.

The Supreme Court reversed. It said the idea that the premium pay must be either wages or penalties was "a false dichotomy." A security guard in this case "becomes entitled to premium pay for missed or noncompliant meal and rest breaks precisely because she was required to work when she should have been relieved of duty," Justice Leondra R. Kruger wrote for the unanimous court. Naranjo v. Spectrum Security Services Inc., 13 Cal. 5th 93 (Cal., 2022).

Marsili said the opinion reconciles the two earlier decisions that had left lower courts confused. "Premium payments to be paid pursuant to Labor Code Section 226.7 are wages, hard stop, period," he said.

Unfortunately for his side, the Court of Appeal on remand ruled that Spectrum Security had presented good faith defenses showing its premium pay failures were not "willful," as required by one of the two Labor Code sections, and therefore also not "knowing and intentional," as required by the other. Thus, the court held, the security guards cannot collect additional penalties and attorneys' fees. Naranjo v. Spectrum Security Services Inc., 2023 DJDAR 1620 (Cal. App. 2nd Dist., filed Feb. 27, 2023).

"We disagree wholeheartedly with the court's legal analysis," Marsili said. The plaintiffs have asked the Supreme Court to review the decision.

"The case is not even close to being over," Rosen said.

- Don DeBenedictis