In a landmark decision, the California Supreme Court recently held in Murphy v. Kenneth Cole Productions, 40 Cal. 4th 1094 (2007), that the extra one hour’s pay that an employer pays to its employee for a missed meal or break period is a wage and not a penalty. The impact of this decision is significant because the statute of limitations for the non-payment of wages is three years, while the statute of limitations for a penalty is one year.
John Paul Murphy, plaintiff in the case, was an employee for Kenneth Cole, a retail clothing store. He filed a complaint with the California Labor Commissioner for missed meal and rest periods. Kenneth Cole argued that Murphy was not entitled to any meal or break periods because he was an exempt employee. It further argued that even assuming that Murphy was entitled to meal and rest periods, the subject violations were a mere penalty and not a wage. The California Supreme Court ultimately held that the additional hour of pay that an employer owes an employee for missing a meal or break period is a wage and not a penalty and thus, subject to a three-year statute of limitations.
The impact of this decision is that:
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Since the one-hour of additional pay is a wage, employees may now go back three years in order to plead a claim for unpaid wages. Moreover, there is a potential additional fourth year if the employees also make out a separate claim for unfair business practices.
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Prevailing parties in a meal and rest period case can potentially recover attorney’s fees under California Labor Code Section 218.5.
The California Supreme Court concluded that the administrative and legislative history behind the additional one hour of pay was intended to establish a premium wage to compensate employees when they miss their meal or break periods or when the employer fails to provide for them.
Employers should closely monitor their employment practices to ensure that employees who are entitled to meal and rest breaks are taking them.
For further information, please contact Kristine Kwong or your regular Hinshaw attorney.
This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. |