California Meal Period Decisions Require Hotels To Review Current Practices

By Rebecca King Associate, Fisher Phillips | April 26, 2020

Last year brought numerous adjustments in the legal landscape for California employers – and meal periods were no exception. And as hotel employers in the Golden State, you may want to be familiar with some of these adjustments.

California appellate courts focused on the interpretation of statutory language in two areas: (1) on-duty meal period agreements; and (2) the method for calculating premium pay for failing to provide a compliant meal period. The courts recently applied strict interpretations to statutory language governing both the requirements for on-duty meal period agreements, as well as calculating the hour of pay at the "regular rate of compensation" for premiums paid when eligible employees are not provided with a compliant off-duty meal or rest period.

It is important for California hotel employers to know about the impact of these cases and how they can comply with the new changes in law.

On-Duty Meal Period Agreements Must Be Specific…Or Else

Many hotels provide 24/7 access for guests and, as a result, employ Night Auditors and/or have security overnight. Because these positions are typically staffed solo, these employees are generally unable to take a fully-compliant meal period as they must remain on-site during their meal break. Even if the employee is otherwise able to take a full, timely 30-minute break, if they are not permitted to leave the premise during that time it is not considered an "off duty" meal break and, if it does not meet the conditions for an "on duty" meal period, is considered to be a violation of California law.

However, depending on the circumstances, these positions may qualify for an "on duty" meal period which is a very narrow exception to the general requirement for companies to provide off duty meal periods to employees who work a shift in excess of five hours.

On-duty meal periods are permitted when the nature of the work prevents an employee from being relieved of all duty and both parties (the employee and the company) agree in writing to an on-the-job paid meal period. It is important to note that simply an agreement between you and the employee to an on-duty meal period is insufficient-the job itself must prevent the employee from being relieved of all duty, which requires an analysis of the specific facts surrounding that job position.

If the conditions are met, employers are only obligated to pay the employee for the time worked, including the time worked "on duty" by the employee for the meal period. Otherwise, employers must pay a "premium" in the amount of "one additional hour of pay at the employee's regular rate of compensation for each workday that the meal or rest or recovery period is not provided." However, the fact that premium is paid does not necessarily excuse you from penalties under the Private Attorneys General Act (PAGA).

In Naranjo v. Spectrum Security Services, Inc., a California appellate court examined an on-duty meal period agreement in place at Spectrum Security Services. The case highlights the fact that on-duty meal period agreements are a very narrow exception to the requirement to provide premium pay whenever an employee is not provided with a duty-free compliant meal period. If the requirements for an on-duty meal period are not strictly met, it can be very costly, as Spectrum discovered to the tune of about $1.4 million dollars.

Spectrum contracts with federal agencies to take temporary custody of federal prisoners and ICE detainees for appointments requiring supervision outside of their custodial location, as well as witnesses awaiting court appearances. Two officers were assigned to each charge and were only permitted to leave their charge for restroom breaks. The officers were required to take "on-duty" meal periods, which included being on-call and within radio range if they had coordinated with other officers to allow them to leave to obtain food nearby.

As part of their employment, Spectrum officers acknowledged receipt and examination of operation manuals, which outlined the requirement that meal periods were "on duty" and that officers were only permitted to leave their charge for short restroom breaks. Spectrum claimed that the officers understood and agreed to the on-duty meal periods and knew they could revoke the agreement by declining the on-call assignment, asking for another shift, asking for other accommodations, or quitting. However, the policies at issue did not state in writing that employees could, in fact, revoke the on-duty meal period agreements at any time.

The relevant California Wage Order requires a written agreement which "shall state that the employee may, in writing, revoke the agreement at any time." Spectrum argued that substantial compliance with the Wage Order is sufficient, and thus, because officers knew they could revoke the agreement, it had a compliant on-duty meal period agreement despite the lack of the written revocation clause.

The court found there was no applicable legal support for Spectrum's position that substantial compliance with the Wage Order's on-duty meal period agreements was sufficient. Instead, it reemphasized that the exception for on-duty meal periods is "exceedingly narrow" and that permitting substantial compliance instead of strict compliance with the Wage Order would "shatter" the narrow on-duty meal period exception.

As a result, the court held that the Wage Order language requires a written agreement which expressly includes language advising "the employee may, in writing, revoke the agreement at any time."

The Strict Interpretation Of Premium Pay Language Benefits Employers

In another case from the past year, the California Court of Appeal separately considered how to calculate the hour of premium pay owed when employers fail to provide a compliant meal or rest period.

The plaintiff in Ferra v. Loews Hollywood Hotel, LLC argued that the meal and rest period premiums were paid improperly because the rate of premium pay was at the employee's base rate (hourly wage) and did not consider non-discretionary bonuses or similar compensation. The plaintiff further contended that the phrase "regular rate of compensation" should be calculated the same as the "regular rate of pay" used for calculating overtime compensation.

The court examined the statutory language and concluded that because the legislature used "of compensation" with premium pay and "of pay" with overtime pay, it must have intended for there to be a distinction between the two. Finally, the court examined federal authority – which is split on the issue – with some courts holding that the overtime calculations are correct, and others finding the base wage to be sufficient.

Ultimately, the appellate court held that you are obligated to provide a full extra hour of pay only at the employee's base hourly rate. It concluded that you are not required to include additional types of compensation in the calculation.

Conclusion

Given the Naranjo decision, if you have or are considering the implementation of on-duty meal periods, it is important to make sure you are fully complying with the outlined requirements. If an on-duty meal period is not compliant, you must pay the one-hour premium. However, you should also keep in mind that payment of the one-hour premium does not necessarily relieve you from other penalties for failure to provide an employee with the mandated meal (or rest) period.

If you have not recently examined your on-duty meal period agreements, you should have an attorney review them to ensure compliance with these recent decisions. In addition, you should confirm that your retention policies and practice ensure that you are keeping these records for at least four years after an employee's employment ends to ensure that you can produce the compliant on-duty meal period agreement if needed to defend against claims relating to the on-duty meal period.

In addition, you also may be able to take advantage of meal period waivers that may apply to employees working no more than six hours (first meal period waiver) or 12 hours (second meal period waiver) in a day. Generally, no more than one meal period can be waived each day. Such waivers generally do not have a strict writing requirement (although a written agreement for any waiver is generally recommended).

If you do not have an on-duty meal period agreement in place, the Ferra case provides some guidance on calculating the meal-period premiums that must be paid when an employee is required to work through a meal (or rest) period and whether to pay the premium at the employee's base rate. Indeed, federal authority is split on this issue, and recent non-binding federal authority interpreting California law has required incentive pay to be included in these calculations.

However, the issue may be revisited, in which case the California Supreme Court, the Industrial Welfare Commission, or the state legislature may have the last word. If an appellate court decision interprets existing law, that decision generally applies retroactively. By contrast, if the IWC or the legislature amends or passes a new statute, that ruling generally will only have prospective effect. Thus, we recommend discussing the pros and cons of following the Ferra decision with your attorney.

Ms. King Rebecca S. King is an associate attorney with labor and employment law firm Fisher Phillips in Irvine, Calif. She focuses on practical solutions with an eye on cost effective resolution of employment-related issues, and she counsels and defends clients in all areas of labor and employment law to help businesses try to prevent or resolve potential issues before they result in litigation. Ms. King has successfully extracted clients from lawsuits early, saving significant costs, by negotiating dismissals with prejudice in exchange for costs waiver and winning demurrers without leave to amend. She also advises clients on hiring, firing, disciplinary matters and compliance with labor law. Rebecca King can be contacted at +1 949-798-2183 or rking@fisherphillips.com Please visit http://www.fisherphillips.com/attorneys-rebecca-king for more information. Extended Biography

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Hotel Newswire is a newswire service that distributes press releases on behalf of our users. If you decide to submit a press release for distribution through our system we will transmit your entire press release including any personal information therein contained to our media contacts and online distribution points including search engines. This is the only redistribution of your information that we engage in. Your submission of press releases through our system indicates consent with this policy. The information we collect during your registration process is used to notify users about updates to our service and inform users of any special events hosted by Hotel Newswire. This information is not shared with other organizations for commercial or non-commercial purposes.

Cookies: Our system requires the use of cookies to enable the user to log back into our website to access information from the newswire, without having to log in each time using the required username and password.

If you do not want to receive email from us in the future, please let us know by following instructions included in our communication with you. Users who supply us with telephone numbers online may receive telephone contact from us regarding their account, or informing them of new products and services available on the HotelExecutive website. If you do not wish to receive such telephone calls, please edit your account and remove your phone number from your account profile. This can be done from your user account menu.

Ad Servers: We do not partner with or have any relationship with any ad server companies. From time to time, we may use customer information for new uses not previously disclosed in our privacy notice. If our information practices change at any time, we will post the policy changes to our website to notify you of these changes and provide you with the ability to opt out of these new uses. If you are concerned about how your information is used, you should check back at our website periodically.

Upon request we provide site visitors with access to all information (including proprietary information) that we maintain about them. Users can access this information by logging in to their account.

Security: We always use industry-standard encryption technologies while transferring and receiving user data exchanged with our site. We have appropriate security measures in place in our physical facilities to protect against the loss, misuse, or alteration of information that we have collected from you on our site. We do not store credit card information in our systems.

If you feel that this site is not following its stated information policy, you may contact us.

Hotel Newswire Headlines Feed  

Zoe Connolly

Geneva's hotel management school provides a three-year program for future managers in the hospitality industry. The worldwide pandemic, Covid-19, has deeply affected the restaurants and hotels in Switzerland, imposing a total shutdown since March 2020. Ecole Hoteliere Geneve, The Hotel Management School of Geneva (EHG), had to close its doors but was able to stay in session with virtual classes thanks to a new digital platform and the remarkable commitment of EHG management, teachers, and the school's student body. READ MORE

Doug Luciani
Jerry Merriman
Michael Bedner
Lily Mockerman
Cindy Woudenberg
Scott Nadel
Marina MacDonald
Paul Hancock
Paul van Meerendonk
Paul Feeney
Coming up in June 2020...

Sales & Marketing: Technology Rules

It is impossible for any hotel to develop an effective sales and marketing plan that doesn't include a wide-ranging digital strategy. Online platforms have impacted virtually every aspect of their business, due to major changes in how Internet users research, plan, and book their hotel visits. As a result, a successful plan includes generating traffic through the use of a hotel website, social media, email and a myriad of other digital marketing technologies. One such strategy uses data collection and automation technology to create personalized content to individual customers. The goal of personalization marketing is to engage potential customers by communicating with them as individuals - to establish a more personal relationship - as a way of encouraging them to visit a property. Video marketing is also extremely important. Showing someone authentic video from a specific location is immersive and engaging, and video is still the preferred way for customers to interact with a hotel brand. Voice and Visual Search are increasingly in demand, as consumers are moving away from typing queries into a search engine. Instead, they can simply speak their request into their phone, and find and book a hotel without ever typing a word. Similarly, other platforms allow consumers to search visually for almost any image, and find out pricing information, shopping comparisons and how-to-buy - all from the app. The adoption of Artificial Intelligence is also becoming popular. The ability of chatbots to answer simple questions or fulfill requests 24/7 is undeniably appealing. In addition, A.I. seems best positioned to qualify leads that can be later nurtured and closed by a human sales expert - all at a fraction of the cost of a traditional support team. The June Hotel Business Review will examine how some sales and marketing professionals are integrating these innovative technologies into their operations.