October 18, 2022

Meal And Rest Break Claims Now Pose High Financial Risks to California Employers

You've Reached Your
Free Article Limit This Month
Register for free to get unlimited access to all OnPractice content.
Register Now

While perhaps overlooked in favor of other high-profile rulings (we're looking at you, Viking River Cruises), the California Supreme Court's decision in Naranjo v. Spectrum Security Services, Inc., No. S258966 (Cal. May. 23, 2022) may turn out to be one of the most significant cases of the year for California employers. As we previously reportedNaranjo held that meal and rest period premiums may be characterized as "wages" under the California Labor Code, triggering derivative wage statement penalties under Labor Code section 226 and waiting time penalties under Labor Code section 203 if meal and rest period premiums go unpaid. The full consequences of that ruling are still unfolding, as evidenced by the Court of Appeal's recent decision in Betancourt v. OS Restaurant Services, LLC, 83 Cal. App. 5th 132 (2022). Betancourt holds that because meal and rest period premiums are now understood to be "wages," an employee who successfully sues for recovery of those premiums will now be entitled to attorneys' fees as well. In yet another distressing ruling for employers, Betancourt may increase risk and litigation costs for employers by allowing plaintiffs' lawyers to recoup potentially large fee awards, even where the recovery for the employee is small.

The plaintiff in Betancourt sued her former employer for a variety of claims, including (1) meal and rest break violations, (2) wage statement violations, (3) waiting time violations, (4) wrongful termination, and (5) retaliation. After discovery, the parties agreed to dismiss the wrongful termination and retaliation claims, and settled the remaining wage and hour claims for a (relatively) modest sum of approximately $15,000. But the plaintiff wasn't done. She then filed a motion pursuant to California Labor Code section 218.5(a) seeking attorneys' fees and costs of more than $580,000. (Section 218.5(a) allows plaintiffs who prevail on their wage claims to recover their attorneys' fees.) Reducing that amount, the trial court awarded plaintiff nearly $290,000 in fees and costs - roughly 18 times what the plaintiff had actually settled her wage claims for. The employer appealed, contending that the award of attorneys' fees should be reversed.

After Naranjo, the legal issue for the Second District Court of Appeal to decide was, according to the Court, relatively straightforward: does Section 218.5(a) permit an employee to recover attorneys' fees if she obtains a favorable result on a claim for meal and rest break premiums, or on derivative claims for waiting time or wage statement penalties? The court said yes, based on what it called the "clear" holding of Naranjo that "extra pay for missed breaks constitutes wages." In light of that holding, the attorneys' fee award under Section 218.5(a) was essentially automatic for the prevailing plaintiff.

Plaintiffs often have everything to gain and little to lose when it comes to seeking attorneys' fees under Section 218.5 (a). While plaintiffs are entitled to fees every time they win, employers can recover fees "only if the court finds that the employee brought the court action in bad faith." And as Betancourt itself demonstrates, there is no proportionality requirement for fees: even a single unpaid meal or rest break premium places an employer on the hook for a potentially gigantic fee award. After Naranjo and Betancourt, meal and rest break claims pose high financial risks to California employers.

ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.

More From Greenberg Traurig

California AG Announces Investigation of Mobile Apps' CCPA Compliance

By Gretchen A. Ramos Greenberg Traurig January 31 , 2023

On Jan. 27, 2023, the California Attorney General announced his office is investigating and sending letters to businesses in the retail, travel, and food industries with popular mobile apps that allegedly are not in compliance with the California Consumer Privacy Act (CCPA) by failing to offer a consumer opt-out mechanism for sales, or honor rights requests submitted via authorized agents.

E2 Law Podcast: Episode 20 | Empire Environmental - Review of New York's Cap-and-Invest Program to Reduce Emissions and Achieve Climate Goals

By Steven C. Russo Greenberg Traurig January 27 , 2023

In this episode of Greenberg Traurig's E2 Podcast, attorneys Steven Russo, Zackary Knaub, and Jane McLaughlin discuss New York State’s cap-and-invest program to limit greenhouse gas emissions and share revenue with New Yorkers from disadvantaged communities to help cover utility bills, transportation costs, and decarbonization.

5 Trends to Watch: 2023 Data Privacy & Cybersecurity

By Gretchen A. Ramos Greenberg Traurig January 26 , 2023

While ransomware attacks have been on the rise since 2020, a recent trend has emerged where threat actors are bypassing ransomware malware and encryption tactics and going straight to data theft.

More From Wage and Hour Litigation

2022 New York Roundup: State, City Legislative and Related Developments

By Richard I. Greenberg Jackson Lewis P.C. January 30 , 2023

In 2022, New York State and New York City enacted many new workplace laws, creating additional obligations for employers.

USCIS Agrees to Bundle H-4, L-2, and EAD Applications Filed with Principal's Petition

By Kristen T. Burke Greenberg Traurig January 26 , 2023

As a result of a class action lawsuit, U.S. Citizenship and Immigration Services has entered into a settlement agreement to “bundle” an application to extend or change H-4 or L-2 status and, if applicable, an employment authorization document (EAD) application, if the application is filed with the principal’s corresponding H-1B or L-1 petition.

District of Columbia Council Delays Effective Date of Act Eliminating Tip Credit to May 2023

By Alyson J. Guyan Jackson Lewis P.C. January 25 , 2023

The District of Columbia Council has postponed the first effective date of voter Initiative 82, the “Tip Credit Elimination Act,” from January 1, 2023, to May 1, 2023.

Featured Stories