Naranjo increases potential liability for meal period and rest break violations.
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This means California employers will now be liable for waiting time penalties under Labor Code Section 203 if they do not pay the required premium payments in the employees’ final wages, which are due at the time of termination, or within 72 hours of a resignation.
Second, the Naranjo decision held that employers must pay meal period and rest break premium payments within the statutory deadline for all wages due to employees upon separation of employment.
The California Supreme Court affirmed the Court of Appeal’s holding that unpaid meal period and rest break premium payments accrue pre-judgment interest at the rate of seven percent per year. In reversing a prior Court of Appeal decision, the Supreme Court held that the premiums are not only meant to provide compensation for missed meal periods or rest breaks, but are also intended to provide compensation for work the employees perform during a meal period or rest break. In Naranjo, the California Supreme Court held that employers must record such premium payments (related to missed, late or short meal or break times) on non-exempt employees’ wage statements corresponding with the pay period(s) in which such premium payments are triggered. Naranjo ruling creates new employer obligations and additional potential exposure for non-compliance with respect to meal periods and rest breaks in two key respects.įirst, under California Labor Code 226.7, if an employer fails to provide an employee with a compliant meal period or rest break, the employer must pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest period was not provided.
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