Wage Law

Now that we are back to having only pure dicta and District Court opinions to guide the trial courts while the Supreme Court processes the cases which will decide whether pay under Labor Code § 226.7 is a wage or a penalty, it is worth watching what those District Courts are doing with the issue.

The first published District Court case addressing statutes of limitations for meal and rest period pay was Tomlinson v. Indymac Bank F.S.B. (C.D. Cal. 2005) 359 F. Supp. 2d 891, where Judge James V. Selna held that the extra hour of pay for meal and rest period violations were wages.

the Court notes that its conclusion is consistent with the Labor Code's definition of "wages," which is "all amounts for labor performed by employees. . . ." CAL. LAB. CODE § 200(a). Under Section 226.7, the employee is paid an amount (equal to one hour of regular pay) for labor performed during his meal break or rest period. For these reasons, HN16the Court finds that an employee earns the additional hour of pay when he is not given a meal break or rest period. An award under Section 226.7 thus is restitutionary and may be recovered under the UCL. Cortez, 23 Cal.4th at 178-79 ("An order that earned wages be paid is therefore a restitutionary remedy authorized by the UCL.").

Earlier this year, in Corder v. Houston's Rests., Inc. 2006 U.S. Dist. LEXIS 20170 (C.D. Cal. Mar. 21, 2006), Judge Cormac J. Carney disagreed, finding that the California Legislature intended for payments under Labor Code § 226.7 to be a penalty because it was imposed as a result of an employer's violation of the law.

However, most District Court judges are deferring any rulings on the meal and rest period statute of limitations issue, pending resolution of Murphy v. Kenneth Cole Production and related cases.

For example, in West v. Circle KStores, Inc., 2006 WL 355214 (E.D. Cal. Feb. 14, 2006), Judge William B. Shubb denied a motion for partial summary judgment on the statute of limitations under Labor Code § 226.7 on the grounds that the motion was "premature and seeks the court's opinion on matters related only to the scope of its damages. Such motions should not be heard before plaintiffs' motion for class certification."

Likewise, in Cornn v. UPS, 2006 U.S. Dist. LEXIS 20095 (N.D. Cal April 3, 2006), the employer brought a "motion to correct the class definition pending new California authority or, in the alternative, to bifurcate and stay a portion of the class pending determination by the California Supreme Court of whether claims under California Labor Code section 226.7 are penalties governed by a one-year statute of limitations." Judge Thelton E. Henderson denied the motion without argument, finding it premature, but ordered that "to the extent that additional discovery is necessary, the parties shall separately track time spent on discovery or other work related solely to Plaintiffs' section 226.7 claims beyond the one-year statute of limitations period; doing so will allow the Court to make a more appropriate award of attorneys' fees should that issue subsequently come before the Court."