Meal and Rest Break Premiums Should Be Paid at Employees' Regular Hourly Wage

A California appeals court held that the "regular rate of compensation" for calculating meal or rest break premiums does not mean the same thing as the "regular rate of pay" for calculating overtime premiums. The premium for missed meal and rest periods should be based on the employee's hourly wage and employers need not consider other forms of payment an employee receives, such as commissions and nondiscretionary bonuses, the court said.

In California, all nonexempt employees are generally allowed to take an uninterrupted 30-minute meal period and two rest periods during an eight-hour shift. If an employee is unable to take a required break, then California law requires the employer to pay the employee a premium of one hour's wages at the "regular rate of compensation" for each day that a break is missed. If a meal break and a rest break are missed, the employee must be paid two hours' wages, but no additional premiums must be paid for more missed breaks in a single day.  

The plaintiff worked as a bartender for Loews Hollywood Hotel from June 16, 2012 to May 12, 2014. Loews paid her and other hourly employees a one-hour premium payment if the employee did not receive a meal or rest break. Loews paid the premium based on the plaintiff's base hourly rate.

[SHRM members-only HR Q&A: What are the meal and rest break requirements for California employees?]

In a class action, the plaintiff alleged that Loews improperly calculated the premiums because it used only the base hourly wage. She argued that Loews should have calculated the "regular rate of compensation" the same way employers must calculate the "regular rate of pay" for overtime purposes, which, in addition to the base hourly wages, includes all compensation received during the workweek, such as commissions and nondiscretionary bonuses.

The lower court disagreed and dismissed the plaintiff's lawsuit before trial. The appeals court affirmed the ruling. In comparing both the overtime and meal-and-rest-period statutes, the appeals court reasoned that if the legislature had intended the terms "compensation" and "pay" to mean the same thing, it would have used the same words.

The appeals court also noted that while the central purpose of the overtime statute is to pay employees for time spent working, the meal and rest period premiums are intended as extra compensation for missed breaks. Because the statutes use two different terms and have two different purposes, the appeals court reasoned that "regular rate of compensation" in the meal and rest break statute does not mean the same thing as "regular rate of pay" in the overtime statute.

Ferra v. Loews Hollywood Hotel, Calif. Ct. App., No. B283218 (Oct. 9, 2019).

Professional Pointer: Although this is the first published California opinion to address this issue, several federal courts have issued decisions on the question and have come down on either side. Some courts hold that the premiums must be calculated in the same way as overtime, while other courts have ruled in accordance with the state appeals court in this case. The California Supreme Court may ultimately decide this question.

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.