Employees are owed “premium pay” when they miss a meal break or a rest break. Labor Code section 226.7 provides that if an employer fails to provide a meal, rest or recovery period, the employer must pay the employee one additional hour of pay at the employee’s regular rate of compensation, for each work day that the meal or rest break is not provided.

Until the California Supreme Court settled the issue in its July 15, 2021 decision, it was unclear under Labor Code section 226.7, specifically whether “regular rate of compensation” means the same as the “regular rate of pay,” which is used to calculate overtime premiums as required by Labor Code section 510.

  • Based on an analysis of the statutes, legislative history, and consideration of the overall policy goals of California wage and hour laws, the California Supreme Court reversed a Court of Appeal decision and concluded that “regular rate of compensation” means the same thing as “regular rate of pay.” Thus, meal and rest break premiums must be paid using the same calculation used for overtime pay, the regular rate of pay, which includes all compensation received during the workweek such as the base hourly wages, commissions, and nondiscretionary bonuses.

The court clarified that its ruling that meal and rest break premiums must be paid at the regular rate of pay is retroactive. Employers should consult with legal counsel about their current and past meal and rest break premium payment practices to assess any compliance issues and determine what actions, if any, should be taken.

The Wage Orders address meal and rest breaks in two different sections.

There is one violation for a missed meal break and one violation for a missed rest break. In other words, if you miss both a meal break and a rest break in one day the employee is entitled to two hours of premium pay. However, the maximum amount that can be owed for each day is two hours of premium pay because the statute requires payment of the premium for each workday, not each occurrence during a work day. So for example, if on a single workday one meal break and two rest breaks were not provided, the employer would still only owe two hours of premium pay.

In United Parcel Service v. Superior Court of Los Angeles County, a California Court of Appeal ruled that there are two separate remedies because the premium wage requirement is contained in two separate sections of the Wage Orders.

Further, the one hour of pay is a wage, not a penalty. Wages are benefits that an employee is entitled to as part of compensation, including money, vacation pay and room and board. Employees who must forego the meal and rest breaks give you free work and lose a benefit to which they are entitled. In other words, the employees lost wages they were owed. The hour of additional pay is not only an incentive for employers to comply with the law but, foremost, a premium wage that compensates employees — not a penalty.

The distinction between a penalty and a wage is important as there is a three-year statute of limitations for the one additional hour of pay employers must pay employees when a meal or rest break is not provided, as opposed to only one year for a penalty.