By law, California employers who unlawfully make an employee work during all or part of a meal or rest period must pay the employee an additional hour of pay. In 2019, in the case of Naranjo v. Spectrum Security Services, Inc. (2019) (Naranjo II), the California Court of Appeal held that this extra pay for missed breaks (commonly referred to as “premium pay”) does not constitute “wages” that must be reported on statutorily required wage statements during employment) and paid within statutory deadlines when an employee leaves the job. The Supreme Court reversed this portion of Naranjo II holding, and concluded such premium pay constituted wages. The Supreme Court then remanded the matter to the Court of Appeal to resolve two issues (1) whether the trial court erred in finding Spectrum Security Services, Inc. (Spectrum) had not acted “willfully” in failing to timely pay employees premium pay which would bar recovery; and (2) whether Spectrum’s failure to report missed-break premium pay on wage statements was “knowing and intentional,” as is required for recovery of any penalty.
On remand, the Court of Appeal concluded (1) substantial evidence supported the trial court’s finding that Spectrum presented defenses at trial—in good faith—for its failure to pay meal premiums to departing employees and therefore, Spectrum’s failure to pay meal premiums was not “willful”; and (2) because an employer’s good faith belief that it is in compliance precludes a finding of a knowing and intentional violation of that statute, the trial court erred by awarding penalties, and associated attorneys’ fees.
Beware of placing too much reliance on the “good faith” belief exception created by the Court of Appeal as a bar to penalties for willful violations of wage and hour laws. Here, the issue was litigated, and the Supreme Court and Appellate Court differed on their application of the law thus affirming Spectrum’s good faith in not immediately paying premium pay or reporting it on wage statements.
Generally, the Courts have found an act to be willful if it was intentional. If you have any concern with how your business goes about assessing premium pay and other wage and hour requirements contact your employment or business attorney for his or her opinion.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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