July 2022: California Supreme Court Creates New Obligations for Employers

Update Applicable to:
All employers in the state of California.

What happened?
On May 23, 2022, the California Supreme Court released its decision in Naranjo v. Spectrum Security Services, Inc., placing additional obligations on California employers.

What are the details?
The California Supreme Court specifically held that California employers are required to include premium payments on an employee’s wage statement for any missed, late, or short meal period for the pay period that any such premium payment is incurred.

In addition to now having to include this information on wage statements, employers are also on the hook for waiting time penalties if an employee misses or takes a late or short meal or rest period and the employer does not pay that employee the premium payment.

Accordingly, failure to provide meal and rest break premium payments for missed, late, or short meal or rest periods can produce substantial penalties against California employers. In holding this way, the California Supreme Court’s decision reversed the California Court of Appeal decision which held otherwise.

In addition to its holding regarding the treatment of meal and rest period premium payments for purposes of wage statements and waiting time penalties, the California Supreme Court affirmed the Court of Appeal’s decision to the extent that it held that unpaid meal and rest break premium payments collect prejudgment interest at the rate of 7% per year.

What do employers need to do?
Employers should review the links provided above, review the written policies that are distributed to – and expressly acknowledged by – employees, and ensure that supervisors are adequately trained on California’s meal and rest break requirements.