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California Supreme Court Announces New Formula for Calculating Premium Payments for Failures to Provide Meal Periods or Rest Breaks

By Thomas Lee

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Last week, the California Supreme Court ruled in Ferra v. Loews Hollywood Hotel, LLC that California employers must pay meal period and rest break premiums at the same “regular rate” that applies to the payment of overtime.


Under California law, when a non-exempt employee is not provided with a fully compliant 30-minute meal period or 10-minute rest break (i.e. it is missed, interrupted, late, or shortened), the employer must pay a one-hour premium for each non-compliant meal period or rest break. Since the California Court of Appeal and federal district courts have held that the meal period and rest break premiums should be calculated at the employee’s base hourly rate, the Ferra decision marks a distinct change in the law.


So what does this mean for employers?


Payment of the one-hour meal period and rest break premium must factor in all non-discretionary earnings such as bonuses, meals, lodging, etc. And to make the issue more complicated, the California Supreme Court held that its ruling applies retroactively. California employers should ensure that its meal period and rest break premium payment procedures are compliant as soon as possible.



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