On May 23 2022, the California Supreme Court reversed the Second Appellate District Court of Appeal and made clear that meal and rest period premiums (or “extra pay” or “premium pay”) constitute “wages” and must be accurately reflected on an employee’s wage statement and accurately paid to the employee during the employee’s final pay out. (See Naranjo v. Spectrum Security Services, Inc., (2022) 2022 Cal. LEXIS 2878; Cal. Lab. Code § 226 [setting forth the requirement for employers to furnish accurate wage statements]; and Cal. Lab. Code § 203 [setting forth the requirements for the timely distribution of all wages earned upon an employee’s departure from a job].)Before Naranjo made its way to the California Supreme Court, the Second Appellate District Court of Appeal originally held, that as a matter of law, Labor Code section 226.7 missed-break premium pay is not a “wage” for purposes of Labor Code sections 203 and 226.

The employer maintained a policy that required such employees to remain on duty during meal breaks. Plaintiff was terminated after leaving his post to take a meal break, and he filed a putative class action lawsuit alleging that his employer had violated meal break requirements under the California Labor Code. Plaintiff’s complaint sought meal break premium payments pursuant to Section 226.7. It also sought wage statement penalties pursuant to Section 226 and waiting time penalties for final pay violations pursuant to Cal. Lab. Code §§ 201, 202 and 203 for the employer’s failure to itemize the break premium payment on its employees’ wage statements and its failure to timely pay such break premiums to employees upon their discharge or resignation, respectively.Naranjo disagreed with previous decisions by the Courts of Appeal that had concluded “that a payment must be either a legal remedy or wages,” instead holding that Section 226.7 break premium payments are “both.”

On November 18, the California Supreme Court in Pineda v. Bank of America, No. S170758 (Cal. Nov. 18, 2010) (pdf) clarified two issues regarding so-called “waiting time penalties” (i.e., penalties under California Labor Code Section 203 associated with the late payment of final wages upon termination of employment). First, the Court ruled that a three-year statute of limitations applies to such actions, whether or not accompanied by a claim for the underlying late wages.

On May 23, 2022, the California Supreme Court ruled in Naranjo v. Spectrum Security Services, Inc. that unpaid meal and rest period premiums can form the basis of claims for wage statement violations under California Labor Code section 226 and waiting time penalties under California Labor Code section 203. This is yet another significant decision by the Supreme Court impacting California employers in California particularly since the Court overruled the Court of Appeal, which had held that meal and rest period premiums are not “wages” and therefore cannot lead to wage statement or waiting time penalties.BackgroundCalifornia law generally requires that employers provide non-exempt employees a reasonable opportunity to take an unpaid, off-duty and uninterrupted meal period of at least 30 minutes before the end of their fifth hour of work, and a second meal period before the end of their tenth hour of work.

Facts: Plaintiff Bijon Hill appeared in 10 photo shoots organized by Defendant Walmart, Inc. between July 2016 and August 2017, for a total of 15 days, in non-consecutive periods of one or two days. Plaintiff sued Defendant for more than $540,000 in waiting-time penalties under California Labor Code section 203 for its failure to pay her immediately after each photo shoot ended. Defendant moved for summary judgment on the basis that Plaintiff was an independent contractor outside the coverage of the relevant Labor Code provisions, and on the basis that there was a good-faith dispute about whether Plaintiff was an independent contractor. The district court denied summary judgment on Defendant’s independent contractor argument, concluding that there was a triable question of fact about whether Plaintiff was an employee, but it granted summary judgment on Defendant’s good-faith defense argument. The district court concluded that there was a good-faith dispute about whether Plaintiff was an independent contractor, noting that the short length of time that Plaintiff worked for Defendant and the fact that she had worked for other companies, among other factors, made it objectively reasonable for Defendant to believe that Plaintiff was not an employee.Plaintiff appealed.Court’s Decision: The Court

Wage and hour claims also necessitate that a plaintiff show an employment relationship exists. (See, e.g., Cal. Lab. Code §§ 201, 203.)Totality of the Circumstances Test – Are You My Joint Employer?Courts often apply the “totality of the circumstances” test when evaluating whether a company should be considered an employer of the plaintiff. The test is just like it sounds – courts will look at a myriad of factors and determine whether they indicate that an employment relationship exists.

ersonal liability. (Cal. Lab. Code § 558).Where an employer pays wages with a check, draft, or voucher that is drawn on a nonexistent account or dishonored for insufficient funds within 30 days of receipt, such wages continue as a penalty until paid, up to 30 days. (Cal. Lab. Code § 203.1).Failure to timely pay wages at separation from employment may give rise to waiting time penalties equivalent to the employee’s daily wages for each day wages are unpaid, up to 30 consecutive days of wages. (Cal. Lab. Code § 201-203).Private Attorneys General Act (PAGA) penalties may be applicable for violations of Labor Code sections pertaining to timing of wage payments. (Cal. Lab. Code § 2698 et seq.)Penalties arising from payment with a bad check or insufficient funds may be avoided upon showing that violation was unintentional. (Cal. Lab. Code § 203.1).Obligation to timely pay wages upon separation from employment triggers waiting time penalties only if such failure is “willful” or intentional. (Cal. Lab. Code § 203).PAGA penalties are subject to discretionary decrease to prevent unjust, oppressive, or confiscatory penalties given the situation presented. (Cal. Lab. Code § 2699).ColoradoWages must be paid at least monthly or every 30 days, whichever is longer.Payments must be made on regular paydays and no later than 10 days after the close of each pay period.Employers and employees may agree on different pay periods. (Colo. Rev. Stat. § 8-4-103).Recovery of damages due and may also recover the greater of either two times the amount of wages, compensation, or $1,000. (Colo. Rev. Stat. Ann. § 8-4-109(3)(b)).If willful failure to pay, penalty is increased to three times the amount of wages or compensation due or $3,000. (Colo. Rev. Stat. Ann. § 8-4-109(3)(b)).If employer acted without good faith in withholding wages, the employer must pay up to three times the amount wrongfully withheld, plus attorneys' fees and court costs. (Colo. Rev. Stat. Ann. § 8-4-105(1)(c)).An employer that willfully or inte

California law requires employers to pay non-exempt employees a premium of one hour of pay for non-compliant meal or rest periods – such as when an employee is unable to take their break or does not receive a full, uninterrupted break. California state and federal courts have reached conflicting interpretations as to whether premium pay is considered “wages” for purposes of California waiting time penalties (Cal. Lab. Code § 203) and wage statement requirements (Cal. Lab. Code § 226).The Naranjo case involves a class of security guards who alleged that Spectrum Security Services had violated California labor law by failing to report the premium pay for missed meal breaks on employees’ wage statements and failing to timely pay the premium for missed breaks upon an employee’s separation from employment.

Open Door for Defenses. Both the Court of Appeal and the California Supreme Court did not take up the issues of whether Spectrum acted (1) willfully by failing to pay premium payments upon discharge or resignation (Cal. Lab. Code § 203) or (2) knowingly and intentionally by failing to report premium payments on wage statements (Cal. Lab. Code § 226).

A unanimous three-judge panel reached a decision in the case of Bijon Hill v. Walmart. Last week, the U.S. Court of Appeals for the Ninth Circuit affirmed that Walmart classified a freelance model, Bijon Hill, as an independent contractor in good faith. Therefore, Walmart did not owe Hill waiting time penalties under California Labor Code Section 203 for failing to pay her immediately after photo shoots.Plaintiff Hill, a clothing model, appeared in 10 San Francisco-based photo shoots organized by Walmart over a total of 15 days between July 2016 and August 2017.