CA Court Deems Missed Break Payments are Penalties

January 31, 2006 ( - A California state appellate court has handed employers a victory by ruling that payments owed to current and former employees for not providing them meal and rest breaks are penalties and not back wages.

The underlying issue in the 2 nd  District Court of Appeal ruling in the case involving housewares retailer Bed, Bath & Beyond is important because, under California law, employees can seek repayments for wages going back four years, according to a news report in The Recorder. If the repayments are deemed penalties, workers can only go back a year.

“We read §226.7 [of the state Labor Code] as imposing a penalty on employers who fail to ensure mandated break periods are provided to their employees,” wrote Justice Orville Armstrong for a unanimous panel in Mills v. Superior Court (Bed, Bath & Beyond).

“It’s a huge victory for employers in our wage-and-hour class action world,” attorney David Buffington, who represented Bed, Bath & Beyond, told The Recorder. “It effectively limits potential liability in these enormous class actions by 75 percent.”

However, according to plaintiffs’ lawyers, the whole issue may ultimately end up in the judicial lap of the California Supreme Court.

That is because a different state appellate court issued a contradictory opinion in National Steel and Shipbuilding v. Superior Court, in which justices said similar payments were wages, not penalties.  Last month, San Francisco’s 1st District decided in Murphy v. Kenneth Cole Productions that the payments were penalties.

With both the state and federal Supreme Court, the high court justices often get involved in an issue to settle disagreements among lower courts.

Under California law, employees are required to provide a 30-minute meal break to employees who work more than five hours a day and a second 30-minute meal break to those working more than 10 hours a day.