Litigating California Wage & Hour and Labor Code Class Actions

not to have taken them (although the presumption is rebuttable). In addition, employees
may deny they took meal breaks that they actually took if the employer has not enforced a
requirement that they document such breaks.
Accordingly, when recordkeeping has been poor, these cases are difficult to defend, and
numerous meal period class actions have been filed. With respect to rest breaks, by
contrast, employers need only authorize such breaks; the law is clear that employee may
waive them or that employers need not record the ones they take. For these reasons,
successful rest break class actions are less common. 122
B. Debate over Whether One-Hour Payment Is a “Penalty”
Labor Code Section 226.7, which went into effect January 1, 2001, requires any employer
who fails to provide meal or rest periods, as required by the governing Wage Order, to pay
the employee one hour of pay at the employee’s regular rate. From the enactment of
Section 226.7 until the California Supreme Court resolved the issue against employers on
April 16, 2007, the most hotly disputed issue within the meal and rest period cases was
whether the one hour of pay required by Section 226.7 is a penalty or a compensatory
wage.
Although the distinction between construing the payment as a penalty or a wage may seem
arcane, construing the payment as a penalty would drastically reduce the employer’s
exposure for a meal period class action—sometimes by more than 75 percent—for the
following reasons:
The statute of limitations would be reduced to one year only. 123
The penalties could not be recovered under the Unfair Competition Law, thus
precluding using the UCL to extend the statute of limitations to four years. 124
Waiting time penalty liability could not arise from meal period violations, as such
penalties only arise from failures to pay wages. 125
122
123
124
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Such actions also may require individualized inquiries into whether given employees understood they could take a rest
break and why they failed to do so.
Compare Code Civ. Proc. § 340 (one-year statute for penalty claims) with Code Civ. Proc. § 338(a) (three-year statute
for an action upon a claim of liability created by a statute other than a penalty or forfeiture).
See Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 179 (1999) (plaintiff may not recover
penalty of “treble damages” through UCL action); Bus. & Prof. Code § 17206 (penalties recoverable only in action
brought by the actual attorney general).
Lab. Code § 203 (penalties recovered for failure to pay promptly all wages owed to employees who quit or are
discharged).
Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 32