Under the California Labor Code, employers have the obligation to provide employees with accurate wage statements showing, among other things, the gross wages earned, total hours worked and the net wages earned. An employer who engages in a “knowing and intentional failure” to do this faces monetary penalties to the employee. Employers are also obligated to make immediate payment to employees of all their wages upon termination, and again, face penalties for willfully failing to do so.
And further under the Labor Code, employers are obligated to provide their employees with meal and rest breaks in accordance with the wage order applicable to that industry. Labor Code §226.7(c) provides that if an employer fails to provide such breaks, it is required to pay to the employee “one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided.”
Taking these provisions together raises the following question: When an employer fails to provide the required meal or rest breaks—thus triggering its obligation to make additional payment to the employee–should said payment be considered “wages” that must be reported accurately on wage statements and timely paid upon termination of employment?
In a recent case, the California Supreme Court answered this question in the affirmative. As such, employees who are denied their meal and rest breaks will now see the value of their claims increased, assuming the employer acted with the requisite level of culpability. This may be difficult for cases targeting past conduct, given the previous lack of clarity on the issue. But with this new opinion, going forward employers will no longer be allowed to argue their failure to comply with these requirements was unintentional.