Clarifying Premium Pay for Missed Meal and Rest Periods
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The California Supreme Court held that an employee’s regular rate of compensation for meal and rest period premium pay is synonymous with the employee’s regular rate of pay for overtime calculations. The decision was announced on July 15, 2021, while the court considered the implications of Ferra v. Loews Hollywood Hotel, LLC.
The Case: Ferra v. Loews Hollywood Hotel, LLC
The Court: California Supreme Court
The Case No.: S259172
The Plaintiff: Ferra v. Loews Hollywood Hotel, LLC
The plaintiff in the case is a hotel bartender named Ferra. Ferra alleged that Loews improperly calculated her meal and rest period premium payments by excluding her non-discretionary quarterly incentive bonuses when they completed the premium pay calculations.
The Defendant: Ferra v. Loews Hollywood Hotel, LLC
Loews argued (successfully) before a trial court as well as a court of appeal that Ferra’s ‘regular rate of compensation for meal and rest period premium pay is her base hourly rate of pay and that the regular rate of compensation for meal and rest period premium pay is distinguishable from her overtime regular rate of pay. The California Supreme Court disagreed and reversed the decision from the Court of Appeal. The Supreme Court concluded that: “the ‘regular rate of compensation for meal and rest period premium pay under California Labor Code section 226.7(c) is synonymous with the regular rate of pay for overtime as defined under California Labor Code section 501(a). Thus, employers paying meal and rest period premiums must include non-discretionary payments, meaning those that are paid pursuant to [a] prior contract, agreement, or promise . . . .”
The Case: Ferra v. Loews Hollywood Hotel, LLC
When the California Supreme Court held that an employee’s ‘regular rate of compensation’ for meal and rest period premium pay is synonymous with the employee’s ‘regular rate of pay’ for overtime pay, they clarified a common point of argument in California wage and hour lawsuits. When California employers pay their employees meal and rest period premiums, they must use the employee’s overtime regular rate of pay (including non-discretionary payments for any work performed). The California Supreme Court also ruled that the holding applies retroactively. As such, California employers should review and update their payroll policies and any related procedures associated with meal and rest period premiums to verify that premium payments are paid at the regular rate of pay, and include applicable non-discretionary payments.
If you have questions about California labor law violations or how employment law protects you against violations in the workplace, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.
