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Employees are owed “premium pay” when they aren't provided compliant meal and rest breaks. Under California law, if an employer fails to provide an employee with a meal, rest or recovery period, 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 break is not provided.1
The California Supreme Court has confirmed that under Labor Code section 226.7, “regular rate of compensation” means the same as the “regular rate of pay,” which is used to calculate overtime premiums as required by Labor Code section 510.2 That means you must pay premiums using the same calculation that is used when paying employees for overtime pay. The regular rate of pay includes additional compensation an employee receives during the workweek, such as shift differentials, commissions, and nondiscretionary bonuses.3 For more information, see Calculating Overtime.
The Wage Orders address meal and rest breaks in two different sections, each of which provides for the payment of premiums for violations. Thus, an employee may be entitled to a maximum of two premiums per workday — one premium for any meal break violations and one premium for any rest break violations — no matter how many meal or rest breaks were missed in the day.4
For example, if on a single workday one meal break and two rest breaks were not provided, the employer would only owe two hours of premium pay.
The law treats premium pay not as a penalty but as wages that an employee is entitled to as part of their compensation. Employees who are not provided meal and rest breaks give you free work and lose a benefit to which they are entitled; in other words, the employees lose wages they are owed. The hour of additional pay is not only an incentive for employers to comply with the law but, foremost, a premium wage that compensates employees.5
The distinction between a penalty and a wage is important as there is a three-year statute of limitations for claims for unpaid wages, which includes unpaid premiums, as opposed to only one year for claims for unpaid penalties.
Premium pay for meal and rest break violations must be included in the employee's next paycheck. Because premium pay constitutes wages, it must be reported on employees' wage statements. Failing to do so can result in liability for not providing accurate wage statements under Labor Code section 226. As wages, meal and rest premiums are also subject to pay timing rules, which means that if you fail to pay meal and rest break premiums during employment and/or at termination, you may be liable for penalties.6
1. Lab. Code sec. 226.7(c)
2. Lab. Code sec. 226.7(c); Ferra v. Loews Hollywood Hotel, LLC, 11 Cal. 5th 858 (2021)
3. Ferra v. Loews Hollywood Hotel, LLC, No. S259172, 2021 (Cal. July 15, 2021)
4. Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012); United Parcel Service, Inc. v. Superior Court of Los Angeles County, 192 Cal. App. 4th 1425 (2011)
5. Murphy v. Kenneth Cole Productions, Inc., 40 Cal. 4th 1094 (2007)
6. Naranjo v. Spectrum Security Services, Inc., No. S258966, Cal. Supreme Court (May 23, s2022)