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California's Division of Labor Standards and Enforcement Proposes Regulations Regarding Meal Periods In the Workplace

December 22, 2004

On December 10, 2004, the Division of Labor Standards Enforcement ("DLSE") proposed emergency legislation to clarify existing law regarding meal and rest periods in California. This legislation is very significant for employers in that it allows for more flexibility in the timing of meal periods, provides that employers are not liable if an employee chooses to waive a meal period, and clarifies that any amount paid or owed for failing to provide a meal or rest period is a penalty, not wages. The legislation was slated to go into effect on December 20, 2004. However, due to opposition from labor groups and other entities, the DLSE pulled the emergency legislation and, instead, introduced the legislation through a formal process that will allow the public to comment on it through February 14, 2005.

The specific statutes targeted by this legislation are California Labor Code sections 512(a) and 226.7(b). California Labor Code section 512(a) provides that "[a]n employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes…." Labor Code section 226.7(b) provides: "[i]f an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the Industrial Welfare Commission, the employer shall 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 period is not provided."

Previously, the DLSE interpreted section 512(a) to require employers to provide its employees with a 30-minute meal period by the fifth hour after the start of the workday. As a result, employers could be penalized under 226.7(b) if an employee was not provided his or her break within the first five hours, even if it was just five minutes after the fifth hour. Under the proposed regulations, an initial meal period in a workday may commence at any time before the start of the sixth hour of work. An employer may also allow an employee to commence a meal period even after the start of the sixth hour of work — so long as the employee was "provided" a meal period before this sixth hour of work began, but chose not to take it then. The proposed regulation also states that a second meal period must be provided if the period of work after the end of the initial meal period exceeds five hours. This second meal period may be waived by the employee under the limited circumstances where the employee did not waive the first meal period and the second work period ends before the beginning of the sixth hour.

In a related area, the issue of what it means for an employer "to provide a meal break" will be clarified if the regulation is adopted. Under the proposed regulations, an employer will be deemed to have provided a meal period to an employee in accordance with the Labor Code Section 512 if the employer: (1) makes the meal period available to the employee and affords the employee the opportunity to take it; (2) posts the applicable order of the Industrial Welfare Commission; and (3) maintains accurate time records for covered employees, as required by the posted Order. As a further precaution beyond this criteria, an employer may inform an employee in writing of the circumstances under which he or she is entitled to a meal period and have him or her acknowledge in writing that he or she understand those rights.

Finally, the proposed legislation clarifies the existing language that has been unclear as to whether the pay for a missed meal period is a "wage" or a "penalty."

This confusion regarding the classification of the one hour of pay required by Labor Code section 226.7(b) has resulted in costly litigation, including class action suits, over the issue of whether the pay is a penalty or wage. If the payment is a wage, a three-to four-year statute of limitations applies and plaintiffs may recover attorney's fees, costs and interest under Labor Code sections 218.5 and 218.6. By contrast, if the payment is a penalty, a one-year statute of limitations applies and plaintiffs cannot recover attorney's fees, costs and interest under Labor Code section 218.5 and 218.6. In prior administrative opinion letters, the DLSE interpreted the pay to be a wage based on a strict reading of the statute. The proposed legislation would clarify that any money paid by an employer to an employee as a result of the employer's failure to provide the employee a meal period or rest period is a penalty and not a wage.

In sum, this proposed legislation is great news for California employers in that it will provide flexibility in scheduling and implementing meal breaks, and will provide employers with some much-needed relief in the wage and hour arena, particularly when it comes to potential financial exposure in those instances where section 512(a) is not followed. We will post an update on this legislation once we know whether or not it will go into effect.