California Employers Must Treat Break Premiums as Wages

The California Labor Code obligates employers to provide non-exempt, or “hourly,” employees with meal and rest breaks. And the rules for compliant breaks are strict. Generally, if an employee does not receive uninterrupted, duty-free meal and rest breaks, then the employer must pay a premium to the employee for each violation.

On May 23, 2022, the California Supreme Court ruled that meal and rest break premium pay must now be treated as “wages.” The Court explained this approach is appropriate because the premium pay serves a dual purpose of compensating employees for (1) the hardship of a missed break; and (2) the work performed during the missed break. The change in characterization of premium pay has created a new obligation and payroll-related adjustments for California employers.

What are the effects of this change?

California employers must now ensure that all meal and rest premiums are separately listed on employees’ wage statements and are timely paid to employees. We can also expect the Supreme Court’s decision to apply retroactively so California employers should take the necessary steps to ensure immediate compliance with this new obligation.

With the ever-changing wage and hour laws in California, we understand that it may be difficult to keep current with the Labor Code. But employers must adjust to the law and safeguard against any potential violations. Should you have any questions or would like assistance in ensuring that your business practices are compliant with the California Labor Code, please do not hesitate to contact us.

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