On February 16, 2011, the Court of Appeal of California addressed the issue of whether, under Labor Code section 226.7, an employer must make two separate payments to compensate employees for a failure to provide meal periods and for a failure to provide rest periods.
In United Parcel Service, Inc. v. Superior Court of the State of California for the County of Los Angeles, thirty-two (32) actions were filed against United Parcel Service, Inc. (UPS) by employees who sought compensation for UPS's alleged failure to provide meal and rest periods. Pursuant to Labor Code section 226.7, an employer must pay an employee one additional hour of pay at the regular rate for each work day that the employer has failed to provide a meal or rest period. Plaintiffs sought to recover two hours of pay for each day that a violation of their meal and rest breaks occurred. UPS argued that plaintiffs were entitled only to one premium payment per work day that a violation had occurred pursuant to the language of section 226.7.
The Court found that section 226.7 was reasonably susceptible to alternative interpretations based on whether one focused on the disjunctive "meal or rest period" or upon the words "compensation for each work day." Specifically, based on the disjunctive, the Court stated that it would not be unreasonable to construe the section as allowing one additional hour of pay for failure to provide a meal period, and another for failure to provide a rest period. However, by focusing on "compensation for each work day," an employee would only be entitled to a single payment per work day, whether there was a failure to provide a meal period, failure to provide a rest period, or both. Based on this, the Court looked to extrinsic sources, including the legislative history of section 226.7 and the administrative history of the wage orders, in making its determination.
The Court explained that wage order 9-2000 and other similar wage orders providing separate premium pay remedies for meal and rest period violations were issued by the Industrial Welfare Commission (IWC) the same time Assembly Bill No. 2509 was introduced as a means of enforcing the existing wage order prohibitions against requiring an employee to work during a meal or rest period. The Court concluded that the Legislature was obviously aware of the IWC's wage orders and, therefore, the intent was to conform the statutes to the premium payment provisions adopted by the IWC.
The Court acknowledged that while the wording of section 226.7(b) is not identical to that of the wage orders (the statute provides for one additional hour of pay for each work day that the "meal or rest period" is not provided while the wage orders have separate sections allowing for additional hours of pay for both a meal and rest period), the Court did not regard the insertion of the disjunctive "or," or the failure to provide for the premium payment in separate sections, as indicative of the Legislature's intent to provide a different premium payment than that allowed in the wage orders.
The Court of Appeal concluded that the IWC's wage orders were structured to provide separate remedies for violating employees' rights to meal periods and rest periods. Additionally, in construing section 226.7(b), the Court found that public policy behind such breaks is furthered by permitting one premium payment for each type of break violation. Accordingly, Plaintiffs were permitted to recover two additional hours of pay for each work day that meal and rest break violations occurred.
Although the wage order at issue in UPS, Wage Order No. 9-2001, applies to employees in the transportation industry, it will have widespread implications for employers facing wage and hour claims. This is the first California court to publish a decision examining whether Labor Code section 226.7 permits two premium payments per work day. This case establishes precedent for employees seeking up to two additional hours of pay per work day in which meal and rest break violations occur; one for failure to provide a meal period and another for failure to provide a rest period.