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Premium Pay for Missed California Meal and Rest Breaks Must Include Nondiscretionary Bonuses

BY: Mavanee Anderson, Esq. | 08/06/21

The California Supreme Court determined the premium pay for noncompliant meal and rest breaks must be paid at an employee’s regular rate of pay, which is equivalent to an employee’s regular rate of pay for overtime calculation [Ferra v. Loews Hollywood Hotel, No. S259172 (Calif., 7-15-21)].

This means the premium pay for noncompliant meal and rest breaks must include a number of different kinds of remuneration, such as hourly earnings, salary, piecework earnings, commissions, and nondiscretionary bonuses (e.g., bonuses for hours worked, production, or proficiency, or as an incentive to remain employed by the same employer).

The court decision resolves ongoing legal disputes over whether the meal and rest break premium should be paid at an employee’s regular rate of pay or base hourly pay. Lower court decisions have been split over the matter.

For California payroll professionals, this means payroll processes ensuring overtime premium payment and pay statement compliance also should be applied to meal and rest break premiums. As with overtime premiums, nondiscretionary bonuses must be allocated to the workweeks during which they were earned or, alternatively, allocated evenly to each workweek or each hour worked during the period for which the bonus was paid. If the applicable period is longer than a single pay period, adjustments to pay and corrective line items on pay statements might be required.

Interested in more state and local payroll coverage? APA’s PayState Update eNewsletter is perfect for you.

Mavanee Anderson, Esq., is Editor of PayState Update and Payroll Information Resources for the APA.