Hey California, Did You Know that Payments for Missed Breaks are “Wages”?

On May 23, 2022, the California Supreme Court ruled that premiums paid on account of missed meal breaks or rest breaks (sometimes called “meal penalties” or “rest penalties”) should be considered wages. The decision is Naranjo v. Spectrum Security Services, Inc. This means that employers must:

(1) report the premiums paid on account of missed meal breaks or missed rest breaks on statutorily required pay stubs, and

(2) pay all premiums owed on account of missed meal breaks and missed rest breaks within the time limits set under California Labor Code sections 201 (for termination) and 202 (for quitting).

Failure to report meal-break premiums or rest-break premiums on pay stubs could trigger a California Labor Code section 226 violation.

Failure to pay all due and owing meal-break premiums or rest-break premiums at the time statutorily required time during separation could trigger waiting-time penalties under California Labor Code section 203.

Of course, violations of California Labor Code sections 201, 202, and 226 can only be established if the employee first establishes that there was a violation of the underlying meal-and-rest-break rules. Employers should be mindful to have compliant meal-and-rest-break policies and make sure to enforce them in practice.