The Ever-Shifting Landscape of California Wage Law

​Over the past few years, California has seen many new developments in wage and hour laws. The new rules cover a wide array of topics, ranging from labor-law disputes to COVID-19-related requirements.

The developments include:

• Three California Supreme Court decisions on meal and rest periods.
• A U.S. Supreme Court ruling on the California Private Attorneys General Act (PAGA).
• Reinstatement of COVID-19 supplemental paid sick leave through SB 114.
• COVID-19 exclusion-pay requirements issued by the California Division of Occupational Safety and Health (Cal/OSHA).

It's a mixed bag for companies, with the business community welcoming some of the new rules but not others. To adapt, employers should review their policies and practices to ensure they align with the law.

Meal and Rest Breaks

California has strict requirements for employee meal periods and rest breaks.

In 2021 and 2022, three California Supreme Court decisions increased employers' risk of liability for meal and rest break violations, said Michael Nader, an attorney with Ogletree Deakins in Sacramento, Calif.

In Donohue v. AMN Services, the court prohibited employer policies that round time entries for meal breaks.

The court ruled on premium payments for noncompliant breaks in Ferra v. Loews Hollywood Hotel. According to the decision, the payments should be made using the "regular rate of pay" used for overtime.

This year, the court released another major decision on meal and rest periods. In Naranjo v. Spectrum Security Services, it ruled that premiums are considered to be wages, and employers can face many legal risks arising from noncompliance.

"Nonpayment of that wage could lead to recovery of other penalties, such as waiting-time penalties and wage-statement penalties," observed Los Angeles attorney David Cheng of FordHarrison.

The three cases highlight the importance of properly calculating premiums, according to Lonnie Giamela, an attorney at Fisher Phillips in Los Angeles.

"If they're not paid properly, there could be significant penalties," he said.

PAGA

In California, employees can help state officials with the task of enforcing the Labor Code. Through PAGA, employees alleging labor-law violations can bring civil actions on behalf of themselves and other workers. The employees get 25 percent of any civil penalties, while the remaining 75 percent is allocated to the state government to enforce labor laws.

In general, arbitration is more efficient for companies than litigation, Cheng said. However, employers have faced limitations in their ability to compel arbitration. The 2014 California Supreme Court decision in Iskanian v. CLS Transportation Los Angeles LLC led to a prohibition on PAGA waivers in workplace arbitration contracts.

This year, in the high-profile case of Viking River Cruises Inc. v. Moriana[KK1] [SL2] , the U.S. Supreme Court provided employers with more flexibility. Under the ruling, businesses can require individual PAGA claims to be arbitrated.

As for other types of claims, there are several issues to consider. The court held that Moriana's non-individual claims "may not be dismissed simply because they are 'representative.' " Nonetheless, if a plaintiff's individual claims are forced to arbitration, the plaintiff then cannot maintain non-individual PAGA claims in court.

The Viking River Cruises decision is a win for employers, although they should closely analyze their arbitration agreements to ensure compliance with the ruling, Giamela said.

Meanwhile, California Attorney General Rob Bonta issued a statement emphasizing that PAGA is still an important tool for combating labor violations.

COVID-19 Leave

California provides COVID-19-related leave in two ways, Giamela said.

Under Cal/OSHA regulations, employees who are excluded from the workplace because of specified COVID-19-related reasons must receive "exclusion pay" for a certain time period.

Separately, California law requires 80 hours of COVID-19 supplemental paid sick leave for eligible workers. The state enacted the new COVID-19 leave law in February 2022 after the previous one expired in September 2021.

The new law provides two banks of leave.

The first is for employees who can't work because of quarantine requirements, COVID-19 symptoms, the need to care for a family member in certain situations or vaccination-related reasons.

The second is for workers who have tested positive or who need to care for a family member who has tested positive.

Navigating the rules is a complicated process. To help employers, the California Department of Industrial Relations has posted FAQs, including a description of how the new law interacts with Cal/OSHA regulations.

Insights for Employers

For businesses, the recent court decisions and legislation highlight the need to audit their practices to ensure compliance, attorneys said.

Companies should review their policies at least twice per year to determine if they need to be updated, Giamela said. He also urged employers to be flexible in their ability to adapt to change.

Meanwhile, education and training are also important.

"Managers and supervisors should promote a culture of encouraging employees to take meal and rest breaks," Nader said.

Toni Vranjes is a freelance business writer in San Pedro, Calif.