Applies to: All Employers with CA Employees
Effective: July 15, 2021
In Ferra v. Loews Hollywood Hotel, LLC, the California Supreme Court stated that premiums paid for missed meal or rest periods must be paid at the employee’s regular rate of pay. Employees’ regular rate includes hourly wages and nondiscretionary payments – the same rate used to calculate overtime pay. Additionally, the Court stated that its ruling is retroactive.
Employees must receive a minimum of an uninterrupted 30-minute meal period before the fifth hour of work, and at least an uninterrupted, 10-minute rest period for every four hours worked, or fraction thereof. Under Labor Code § 226.7(c), “the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided.” (Emphasis added.) There, the employee received a base hourly wage and a quarterly nondiscretionary incentive payment; however, premium pay was only provided at the employee’s base hourly wage rate.
Ultimately, the Court stated that an employee’s “regular rate of compensation” has the same meaning as “regular rate of pay” used elsewhere in the Labor Code. “Regular rate of pay” includes hourly pay and any nondiscretionary incentive pay for work performed.
Action Items
- Immediately review meal and rest premium pay for compliance.
- Review with legal counsel for historical corrections.
- Subscribers can call our HR Hotline at (833) 268-5531 for further assistance.
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