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Did You Know that Employers Must Calculate Meal and Rest Premiums Based on the “Regular Rate” of Pay

If a worker misses meal, what is the appropriate amount to pay that worker as a meal-period premium? Employers often think it is the base hourly rate of pay, but that’s not always the case. On July 15, 2021, the California Supreme Court issued a landmark decision, Ferra v. Loews Hollywood Hotel, LLC, that holds that meal and rest premiums, i.e., the one-hour penalties paid to exempt employees when the employee misses or receives an improper meal or rest break, must be based on the employee’s “regular rate of pay”—not the employee’s base hourly rate of pay. This is the same calculation used when paying overtime. The regular rate of pay includes additional compensation, including but not limited to, non-discretionary bonuses, shift differentials, and commissions. The California Supreme Court decision applies retroactively. And, just a friendly reminder, during breaks, employees should not be interrupted, not be on-call, and allowed to leave the premises.

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