California Supreme Court Expands Time Limit to File Meal and Rest Period Claims

On April 16, 2007, the Supreme Court of California issued an eagerly-anticipated decision in Murphy v. Kenneth Cole Productions, Inc. __ Cal. 4th __, No. S140308, 2007 Cal. LEXIS 3596 (Cal. Sup. Ct. Apr. 16, 2007). Murphy holds that the statute of limitations applicable to state wage and hour claims arising due to meal and rest period violations is three years, not one year as the California Court of Appeal had previously held in the case. Under the California Labor Code and applicable orders of the Industrial Welfare Commission, covered employees are entitled to an unpaid thirty minute, duty-free meal period after working for five hours and a paid ten-minute rest period for every four hours worked. The California Labor Code prohibits employers from requiring covered employees “to work during any meal or rest period,” and mandates that if an employer fails to provide covered employees with meal or rest periods as required, “the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.” Cal. Lab. Code § 226.7.

The Court’s determination that the three year statute of limitations applied to meal and rest period claims turned on whether the additional hour of pay, mandated for violations of the California Labor Code concerning meal and rest periods for covered employees, constitutes a “wage” or “penalty.” Pursuant to the California Code of Civil Procedure, a three-year statute of limitations applies to claims for unpaid wages, while claims for penalties are governed by a one-year limitations period. Cal. Code Civ. Pro. §§ 338, 340. In holding that the additional compensation for missed meal and rest periods constitutes a “wage” rather than a “penalty,” the Court considered the plain language and legislative history of the California Labor Code provision mandating the additional pay. The Court reasoned that the term “wages” was defined broadly in the California Labor Code to include “all amounts for labor performed by employees of every description,” including work performed during periods when employees were deprived of meal or rest periods. The Court also noted that statutes governing conditions of employment are to be construed broadly in favor of protecting employees.

The Court in Murphy also ruled that a covered employee may seek to recover unpaid wages for missed meal and rest periods in a civil action even though such claims were not asserted in the administrative proceeding initially filed with the California Labor Commissioner.

The Murphy decision has potentially costly implications for employers operating in California, as it effectively increases the potential for awards available to covered employees through the extension of the claims period for missed meal and rest periods. It is prudent, therefore, for employers to carefully review their policies and procedures to ensure that all employees are classified appropriately and are provided with the statutory meal and rest periods to which they are entitled. In the event that the nature of employees’ work prevents them from being relieved of all duty in order to take meal periods, employers may consider entering into appropriate written agreements with covered employees providing for on-duty meal periods, as provided under certain wage orders applicable to certain industries. The option of entering into such individual agreements is not available to employees covered by a collective bargaining agreement and/or represented by a labor organization.