Wage Law

The Schwarzenegger administration is seeking an emergency order that would jeopardize the right of most California workers to take lunch breaks. The administration calls the proposal a clarification of current law to stem lawsuits against employers who are confused about when to provide the breaks when they can deny workers their breaks.

The administration's statement of reasons said the proposed regulation would:  (1) establish criteria to determine if an employer has met the requirement of providing a meal period; (2) clarify that employees may chose to begin the initial meal period in a workday by the end of the sixth hour of the workday; (3) provide a definition of the term “work period”; and (4) clarify that the one hour of pay an employer must pay an employee for each workday in which a meal or rest period is not provided in accordance with the applicable Industrial Welfare Commission Order is considered a penalty. The Office of Administrative Law was given until December 20 to decide on the proposed regulation.

Current law provides that an employee may not work more than five hours without a 30-minute, uninterrupted lunch break. The new "emergency" regulation would give employers the right to schedule a lunch during their workers' sixth hour of work. Furthermore, companies could meet the lunch break requirement if "the employer informs an employee of the circumstances under which the employee is entitled to a meal period and the employee acknowledges in writing that he or she understands those rights."

The new rules also seek to reduce the time period in which a worker could file a complaint from three years to one, on the ground that the pay due under Labor Code § 226.7 is a "penalty, not wages." Section 226.7 states:

(a) No employer shall require any employee to work during any meal or rest period mandated by an applicable order of the Industrial Welfare Commission.

(b) If 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.

A spokesman for the administration claimed that the new regulation is "not intended in any way to minimize employee rights to their meal or rest periods," but instead, is "designed to give them more flexibility in scheduling." However, the regulation, for which the Chamber of Commerce practically begged, is sought by exactly zero employee groups. Employees simply are not seeking the freedom to work longer hours without breaks.

Why Is This Proposal So Wrong?

1.  Meal and rest periods benefit both employees and employers. Except for those who have proverbial whips cracked over them at all times, workers who do not get breaks are less productive workers than those who get breaks. And fatigued workers cause more accidents and call in sick more frequently.

2.  The "written notice exception" gives employers the right to coerce employees to sign away their rights. Our law firm has several cases pending against employers who, as part of new employee orientation, hand each and every new worker a break waiver, which they are told they must sign if they want to work. This new proposal tells employers that these tactics are acceptable.

3.  The proposal is not a clarification; it is a reversal of existing law. The position taken by the DLSE in its June 11, 2003 opinion letter was that the hour of pay for working through rest or meal periods is a wage, which brings with it a three-year statute of limitations. A change in this rule could mean that corporations like Wal-Mart, being sued after cheating their low-earning workers out of their breaks, could be let off the hook, and their employees would get nothing.

4.  The proposal attempts to circumvent the authority of the courts. Regulations are intended to regulate future conduct or transactions, not to "clarify" existing law, prior conduct or completed transactions. The legislature cannot interpret the law; only the judiciary can. Therefore, a statute or regulation cannot declare that it sets forth "existing law." It can only change the law prospectively. McClung v. EDD (2004) 34 Cal.4th 467. And even then, a regulation can only change the administrative law.

5.  The proposal attempts to circumvent the authority of the legislature. The proposed regulation conflicts with Labor Code § 512 and the applicable wage orders by creating exceptions that allow employers to meet their mandatory duty to “provide” breaks merely by informing an employee of his or her right to a meal period and having the employee acknowledge in writing that he or she understands those rights. Thus, the code giveth, and the reg taketh away. This is not permissible. The California Administrative Procedure Act states: "Whenever by the express or implied terms of any statute a state agency has authority to adopt regulations to implement, interpret, make specific or otherwise carry out the provisions of the statute, no regulation adopted is valid or effective unless consistent and not in conflict with the statute and reasonably necessary to effectuate the purpose of the statute. " (Government Code §11342.2). See Pulaski v. California Occupational Safety and Health Standards Board (1999) 75 Cal.App. 4th 1315, 1338-1341 (a regulatory exemption declared invalid because it conflicted with intent of the statute).

6.  The legislative intent of Labor Code § 226.7 was to treat the hour of pay as a wage. Contrary to an "urban legend" being spread by employment defense lawyers, the legislative history of Labor Code § 226.7 shows that the legislature intended to make the extra hour of pay, due to employees who are not given lunches or breaks, a wage, not a penalty." Early versions of section 226.7 included language providing a remedy described as: (1) a $50 penalty, in addition to (2) payment of wages. However, the language about a "penalty" was omitted and never became part of the final statute. Law is well settled that "[w]hen the legislature rejects language from a bill which was part of it when it was introduced, it should be construed according to the final version." Stroh v. Midway Restaurant Systems, Inc. (1986) 180 Cal.App.3d 1040, 1055.  Moreover, the August 28, 2000 Senate Floor Analysis called the hour of pay "wages", saying that the "[f]ailure to provide such meal and rest periods would subject an employer to paying the worker one hour of wages for each work day when rest periods were not offered." Elsewhere in this analysis, the Senate refers to the "penalty" for 30 days wages, as well as "penal damages" of $50 per violation/$100 for subsequent violations for record-keeping violations, yet it was careful to call the hour of compensation a wage, rather than a penalty.

7.  The Industrial Welfare Commission, not the DLSE, has the legislative authority to promulgate regulations pertaining to wages, hours and working conditions. (See Labor Code § 1173, Labor Code §§ 1182 - 1184, Labor Code § 1193.5, Labor Code §§ 516-517) If the IWC is unable to act (i.e., now that the IWC has been de-funded) the legislature must either delegate an alternate authority or act directly. (See California Constitution, Article XIV, § 1)

8.  The proposal is not an emergency, because it is not necessary for the immediate preservation of public peace, health and safety, or general welfare. If anything, it adversely affects the people's health and safety. The regulation fails to meet the standards of an emergency by showing specific facts supporting the need for immediate action. (Government Code § 11346.1)