California employers could potentially be liable for 2 hours of pay per employee per day as the result of a new ruling by the California Court of Appeals.

In the first appellate-level case to address the issue, the court held that employees can recover up to 2 additional hours of pay for each workday in which they were denied meal and rest periods. It’s now more important than ever to stay vigilant about complying with the break requirements.

Employees Sue for Premium Pay

United Parcel Service (UPS) is facing 32 lawsuits by California employees who claim they’re due compensation for UPS’s failure to provide required meal and rest periods. State Labor Code Section 226.7 requires an employer that fails to provide an employee with a meal or rest period to pay that employee one additional hour of pay (premium pay) “for each work day that the meal or rest period is not provided.”

UPS asked the trial court to make a pre-trial determination of the amount of damages available under the statute. UPS argued that the law allows only one premium payment per employee per workday. The employees asserted that both the statute and the state Industrial Wage Commission’s Wage Orders allow up to two premium payments per workday—one for the failure to provide meal periods and another for the failure to provide rest periods.

The trial court came down on the employees’ side, holding that Section 226.7 allows up to two premium payments per workday. UPS appealed.

Employees Can Recover Double Premium Pay

The Court of Appeals began by examining the relevant terms of the meal and rest period requirements in the Wage Orders. The Wage Orders treat meal periods and rest periods in separate sections, each of which provides for an additional hour of premium pay.

The court found that this structure provides a separate remedy for violations of meal period requirements and for violations of rest period requirements—one for each type of violation.

The appellate court noted that the wording in the Wage Orders is virtually identical to the wording in Section 226.7. The only difference is that instead of having separate sections for meal and rest periods, the statute describes both break periods together and states that the additional hour of pay is for “each workday that the meal or rest period is not provided.”

Based on the legislative history of the Wage Orders—as well as the wording and legislative history of Section 226.7 and the public policy behind the statute and Wage Orders—the Court of Appeals backed up the trial court. It concluded that employees can recover up to 2 additional hours of pay on a single workday if there are both meal and rest period violations. To hold that only one premium payment was available each day, the court found, would encourage an employer to require an employee who already missed a rest break to also miss his or her lunch break.

Your Break Obligations

California law generally requires employers to provide nonexempt employees with a rest period—to the extent practicable—in the middle of each work period. The rest period should run at least 10 consecutive minutes for each 4-hour work period or major fraction thereof (any period longer than 2 hours is considered a major fraction of 4 hours). The rest period must be compensated.

You generally must also provide your nonexempt employees with at least a 30-minute meal period when they work more than five hours. Meal periods are considered “on duty” and compensable work time unless you relieve the employees of all duty and permit them to leave the work premises. On-duty meal periods, however, are only permissible when 1) the nature of the work prevents an employee from being relieved of all duty (such as a solo security guard), and 2) the employer and employee have agreed in writing to an on-the-job meal period. United Parcel Service, Inc. v. Superior Court, Calif. Court of Appeals (Dist. 2) No. B227190, (2011)

Practice Tip: Although the Wage Order at issue in this case applies only to the transportation industry, all of the Wage Orders have similar provisions regarding the penalties for denying required breaks. The ruling therefore expands the potential liability for just about every California employer.