Transcript www.financialexecutives.org

Life after Brinker:
An Employer’s Guide to
Meal & Rest Break Obligations
Presented by
Roger Crawford, Esq.
Best Best & Krieger LLP
Attorneys At Law
Disclaimer: The following information is not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an
attorney before acting or relying upon any information in this presentation. ©2012 Best Best & Krieger LLP
INTRODUCTION
Best Best & Krieger LLP 2012
GENERAL OVERVIEW:
RELEVANT LAWS

FEDERAL LAW, Fair Labor Standards Act
(“FLSA”)
–

STATE LAW, California Labor Codes &
Wage Orders
–

Enforced by the Department of Labor (“DOL”)
Enforced by the California Labor Commissioner
LOCAL ORDINANCES
Best Best & Krieger LLP 2012
GENERAL OVERVIEW:
FEDERAL v. STATE LAWS

SIGNIFICANT Differences
–
–
–
California’s “Over 8” Overtime
Meal & Rest Periods
PAGA (Section 2699)
Best Best & Krieger LLP 2012
GENERAL OVERVIEW:
Recent Popular Class Issues
Overtime/Regular Rate
 Working “Off The Clock”
 Employee (Mis)Classification
 Meal & Rest Break Issues

Best Best & Krieger LLP 2012
MEAL & REST BREAKS
Best Best & Krieger LLP 2012
MEAL BREAKS:
CALIFORNIA REQUIREMENTS (non-exempt)





Minimum ½ hour unpaid break for
employee working at least 5 hours
Unless legal waiver, MUST actually
take
Employees must be fully relieved of
all duties during the meal break
unless the nature of the work does
not permit
Second meal period if work more
than 10 hours
Time cards must reflect actual
break times!
Cal. Labor Code § 512; Cal. Wage Orders
Best Best & Krieger LLP 2012
MEAL BREAKS:
WAIVERS
Best Best & Krieger LLP 2012
MEAL BREAKS:
WHEN WAIVERS ARE ALLOWED
Three Waiver Scenarios:
1)
2)
3)
Work Day Will Be Completed In Less-Than 6
Hours;
“Nature Of The Work”; And
Waiver Of Second Meal Period After 10 Hours,
Less-Than 12 Hours.
Best Best & Krieger LLP 2012
MEAL BREAKS:
Waiver #1: Less-Than 6 Hour Day

Work Must Be Completed In Less-Than 6
hours

Consent Of Employee Is Required (Writing
Preferred)

Authorized Expressly By Section 512
Best Best & Krieger LLP 2012
MEAL BREAKS:
Waiver #2: Nature Of Work

Very Limited Interpretation
–
–
E.g., Graveyard-Shift Guard
Not Applicable Where Just
Inconvenient

Consent Of Employee
Required

Must Be Authorized In
Writing With Employee Right
To Revoke
Best Best & Krieger LLP 2012
MEAL BREAKS:
Waiver #3: Second Break (Less-Than 12 Hour Day)

Waiver Of The Second Break (Required After 10
Hours)

Shift Completed In Less-Than 12 Hours

Employee Consent Required (Writing!)

Expressly Authorized By Statute
Best Best & Krieger LLP 2012
REST BREAKS:
CALIFORNIA REQUIREMENTS

Ten Minute Paid Break For
Every 4 Hours or “major
fraction thereof.”
–


In middle of 4 hours, so far
as practicable
Employees who work less
than 3 ½ hours are not
entitled to rest break.
Time Cards Do Not Need
To Reflect.
Best Best & Krieger LLP 2012
Waiving Rest Breaks

Employees are permitted to freely and
voluntarily forego or waive rest breaks.

Employers should be careful not to coerce,
encourage, or require employees to work
through rest breaks.
Best Best & Krieger LLP 2012
MEAL & REST BREAKS:
WHAT IS THE COST?
Employer Must Pay 1
Hour Of Employee’s
Pay For Each Day In
Which No Break Given
Cal. Labor Code § 226.7
Best Best & Krieger LLP 2012
Meal & Rest Break Violations
Cal. Labor Code § 226.7(b) and Wage Orders provide:

If an employer fails to provide an employee a meal break or a
rest break, the employer shall pay the employee “one
additional hour of pay at the employee’s regular rate of
compensation for each work day that the meal or rest period is
not provided.”

3-year Statute of Limitations (4-year with UCL claim).

Court of Appeal has held that an employer can only be held
liable for two Section 226.7 payments per day: one for
improper meal breaks, and one for improper rest breaks.
Best Best & Krieger LLP 2012
Typical Meal & Rest Break
Violations





Break not provided at all.
Break is too short.
Break that begins too late.
Meal break during which the employee is not
relieved of all duty, or otherwise has their
meal interrupted by work duties.
Meal break for which the employee is not
permitted to leave the premises.
Best Best & Krieger LLP 2012
Meal & Rest Break Violation
Types of Claims
An employer sued for non-compliant meal and rest
breaks typically faces:
 Claims for Section 226.7 wages and overtime.
 Derivative Labor Code violation claims for inaccurate
wage statements and waiting time penalties.
 Claims for civil penalties under the CA Labor Code
Private Attorney General Act (PAGA).
 Claims for restitution under the CA Unfair
Competition Law (UCL).
 Claims for statutory attorneys’ fees.
Best Best & Krieger LLP 2012
The High Price To Employers





Section 226.7 wages.
Unpaid Overtime.
Inaccurate Wage Statement/ Pay Stub (Sec. 226)
– statutory penalties up to $4,000 per employee.
“Waiting Time” Penalities (Sec. 203) – a
continuation of “regular rate of compensation” for up
to 30 days’ maximum.
UCL Claims – provides restitution for wrongfully
withheld wages resulting from any unlawful,
fraudulent or unfair practice and are subject to a 4year (rather than 3-year) statute of limitations.
Best Best & Krieger LLP 2012
The High Price To Employers (PAGA)




PAGA civil penalties are in addition to statutory
penalties (1-year SOL).
PAGA penalties are shared by employees (25%) and
the State (75%).
PAGA provides for attorneys’ fees and costs.
The “catch-all” PAGA civil penalty is $100 per
employee per pay period for the initial violation
and $200 per employee for each subsequent
violation – with no express maximum.
Best Best & Krieger LLP 2012
The California Supreme Court Decides
Brinker Restaurant v. Superior Court


This case was originally
filed in Aug. 2004 and
was before the
Supreme Court since
Oct. 2008.
Brinker addressed and
clarified several
important and/or
unresolved questions re
meal & rest breaks.
Best Best & Krieger LLP 2012
The Brinker Issues
Addresses:
 Whether employers must merely “provide”
employees with the opportunity to take meal
breaks or whether they must “ensure” that
employees actually take their meal breaks.
 Meal break timing requirements.
 Rest break timing requirements.
Best Best & Krieger LLP 2012
Brinker: “Provide” versus “Ensure”


Question: Is the employer merely required to make
available to an employee the opportunity to take a
meal break, or must the employer ensure that the
meal break actually is taken by the employee?
Answer: An employer is only required to make
available to an employee a meal break. (“[A]n
employee must relieve the employee of all duty for
the designated period, but need not ensure that the
employee does no work.”)
Best Best & Krieger LLP 2012
Brinker: The duty to “provide”
The Brinker court declined to set forth any bright line
standard for what an employer must do to satisfy its
obligation to “provide meal breaks.
Instead, it noted that the nature of the employer’s
obligation may “vary from industry to industry, and
we cannot . . . delineate the full range of approaches
that in each instance might be sufficient to satisfy the
law.”
Best Best & Krieger LLP 2012
Brinker: The duty to “provide”
Generally, an employer satisfies its obligation to
“provide” a meal break if:
 It relieves the employee of all duty during her
break.
 It relinquishes control over the employee’s
activities during her break.
 It provides a reasonable opportunity for the
employee to take an uninterrupted 30-minute
break.
 It does not impede or discourage the employee
from taking such breaks.
Best Best & Krieger LLP 2012
Brinker: What if an employee chooses
to work through a provided break?



If a meal break is provided and an employee chooses to
work through it, the employer is not liable for Section
226.7 payments.
At most, the employer will be liable for straight time pay,
but only if it “knew or reasonably should have known that
the worker was working through the authorized meal
period.”
REMEMBER: Additional straight time pay to an
employee who voluntarily works through lunch may result
in overtime liability if the total work hours exceed eight (8)
in the workday or 40 in the workweek.
Best Best & Krieger LLP 2012
Brinker: Affect on class action
litigation?



Generally, employers may now argue (more effectively)
that whether a meal break was “provided” by the
employer is a fact-specific determination, not proper for
class determination.
However, more straight-time pay claims assert the
employer “knew or should have known” the employee
was working through breaks are likely to be filed.
“Barrier pressure” claims remain a viable source of meal
break litigation and may even increase in frequency postBrinker (e.g., the employer systematically understaffs
and/or imposes impossible performance expectations).
Best Best & Krieger LLP 2012
Brinker: Timing of Meal Breaks


Question: What are the timing requirements
for meal breaks?
Answer: Unless waived, a first meal period
must be taken no later than the end of the
employee’s fifth hour of work, and a second
meal period no later than the end of an
employee’s tenth hour.
Best Best & Krieger LLP 2012
Brinker: The “rolling 5” argument is
rejected




In Brinker, the employer gave employees’ their meal
breaks early on in their shifts; thus, the workers did
not get another meal break for more than five hours.
The Brinker plaintiffs argued that employees are
entitled to a meal period after every five hours of
work (on a “rolling” basis).
Under this theory, employee could have been
entitled to two meal breaks in an 8-hour shift
depending on the timing of the first meal break.
The Court held that neither Section 512 nor the
Wage Orders imposed this requirement.
Best Best & Krieger LLP 2012
Brinker: Timing of Rest Breaks



Question: What are the requirements for
rest breaks?
Answer: A rest break must be provided to
employees whose total work time is more
than 3 ½ hours at a rate of ten (10) minutes
per four (4) hours of work or “major fraction”
thereof.
“Major fraction” means greater than one-half.
Best Best & Krieger LLP 2012
Brinker: Rest Break Entitlements
3 ½ to 6 hours = 1st rest break.
 6 to 10 hours = 2nd rest break.
 10 to 14 hours = 3rd rest break.
 14 to 18 hours = 4th rest break.

–
Rest breaks must be at least 10 minutes long.
Best Best & Krieger LLP 2012
Brinker: Rest Break Timing


Question: Is an employer absolutely
required to provide a rest break before a
meal break?
Answer: No. Brinker held that the Wage
Orders do not impose a requirement that the
first rest break precede the employee’s first
meal break … BUT
Best Best & Krieger LLP 2012
Brinker: Rest Break Timing


Brinker held that in an eight-hour shift “as a
general matter, one rest break should fall on
either side of the meal break.”
Brinker left open the possibility that this
“general rule” could be altered due to shorter
or longer shifts and “other factors that render
such scheduling impracticable.”
Best Best & Krieger LLP 2012
Brinker: Still Affirmed Class Cert on Rest
Breaks
Brinker affirmed Class Certification of the plaintiffs’ rest
break claims. Why?
 Because the employer’s written policy on rest breaks
merely provided employees get a 10-minute break
for “each four hours” worked.
 The policy “fail[ed] to give full effect to the ‘major
fraction’” language in the Wage Order, and that was
enough to find a common unlawful policy applicable
to all employees.
TAKE AWAY: Check your policies!!!
Best Best & Krieger LLP 2012
Brinker: Employer Take Aways
To have a compliant meal period, non-exempt
workers must be:
 Actually relieved of all duty for the entire
meal period; and
 Free to leave the workplace; and
 Able to use the meal period time for
whatever purpose they desire.
Best Best & Krieger LLP 2012
Brinker: Employer Take Aways
To be compliant for rest breaks, make sure your
policies entitle rest breaks every four hours or major
fraction thereof.
 As a practical matter, this means that 10-minute rest
breaks generally accrue at the 2nd, 6th, and 10th
hours of work rather than at the 4th and 8th hours.
 On an 8-hour shift, the first 10-minute rest break
accrues once 2 hours of work is completed and the
3rd hour of work has begun; the second 10-minute
rest break accrues once 6 hours of work has been
completed and the 7th hour of work has begun.
Best Best & Krieger LLP 2012
Brinker: Employer Take Aways
As a general matter, meal and rest breaks should be
appropriately spaced throughout the workday.
 Brinker expressly recognized the Wage Orders do
not categorically require the first rest break to
precede the first meal period.
 But, “[e]mployer are …subject to a duty to make a
good faith effort to authorize and permit rest breaks
in the middle of each work period, but may deviate
from that preferred course where practical
considerations render it infeasible.”
Best Best & Krieger LLP 2012
POTENTIAL DAMAGES
Best Best & Krieger LLP 2012
POTENTIAL DAMAGES:
How Much Can A Mistake Cost?

Unpaid Overtime Or Other Wages And/Or Penalties
Per Employee
–
–
–
One-Year SOL For Penalties Under CA Law
Three-Year SOL For General Claims For Wages
Four-Year SOL for Business & Professions Code §§ 17200,
et seq.



Double Damages Under FLSA!!!
California Supreme Court Ruled That Neither A
Prevailing Defendant Or A Prevailing Plaintiff Are
Entitled To Attorneys’ Fees In Actions To Recover
For Meal And Rest Period Premiums Under Labor
Code § 226.7 (Kirby v. Immoos Fire Protection)
Cost Of Defense Of The Claim
Best Best & Krieger LLP 2012
POTENTIAL DAMAGES:
… Plus Penalties

Failure To Pay Any Owed Wages Upon Termination
–

Labor Code § 203 – 30 days waiting penalties at
employee’s daily rate
Refusal To Pay Owed Wages
–
Labor Code § 225.5 – $100 initial violation (each
employee); $200 for subsequent violations (each employee,
per violation, plus 25% of amount unpaid)
Best Best & Krieger LLP 2012
POTENTIAL DAMAGES:
… More Penalties

Underpaid Employee
–
–

Waiting Time Penalties?
–

Labor Code § 558 – $50 for first violation, $100 thereafter (each employee,
per violation)
Labor Code § 1197.1 – $100 for first violation, $250 thereafter (each
employee, per violation)
Labor Code § 203 – Up to 30 calendar days of wages for failing to pay due
wages.
Failure To Pay Minimum Wage
–
–
Labor Code § 1194.2 – liquidated damages in amount equal to unpaid
wages
FLSA – double damages
Best Best & Krieger LLP 2012
POTENTIAL DAMAGES:
Private Attorneys General Act (PAGA)





Cal. Labor Code §§ 2699, et seq.
Civil Action By Employee To Recover Penalties For Certain
Violations Of Labor Code Where Normally No Private Right Of
Action
Employee Gets 25% Of Recovery; State Gets Rest
Employer Pays Employee Attorneys’ Fees
Effective Aug. 11, 2004, SB 1809 Amended To Require A 30day Notice To DLSE Before Civil Action
Best Best & Krieger LLP 2012
POTENTIAL DAMAGES:
Who Has To Pay?


The Company
Per Reynolds Case, Individual Managers Are
Generally NOT Liable For Most Wage Violations
–

May Be Liable For Penalties Only Under Certain Labor
Code Sections Which Expressly Refer To “Responsible
Persons”
NOT Insurance – Wage Claims Are Excluded From
Most Insurance Policies (Such As EPLI)
Best Best & Krieger LLP 2012
POTENTIAL DAMAGES:
Cumulative Effect


Small Violation, Multiplied Over A Large Number Of People,
Equals Big Dollars
For Instance:
–
–
–
–
Assume employees not paid for 10 minutes of overtime a day
Assume $10 an hour (or $15 an hour overtime rate)
Assume 1000 employees
What is at stake?



10 min X 250 work days per year X 3 years = 7500 mins (or 125
hours) per employee
125 hours X $15/hour = $1,875 per employee
$1,875 X 1000 employee = $1,875,000 plus AF
Best Best & Krieger LLP 2012
LOSS PREVENTION TACTICS:
A Partial List






Assess Potential Liability
Audit Practices
Have Adequate Policies And ENFORCE Them
Maintain Up-To-Date Job Descriptions Assessing
Classification
Train Management On Wage & Hour Laws
Have Adequate Resources/ Counsel
Best Best & Krieger LLP 2012