Dec. 13, 2004 Good News for Employers and Employees: DLSE Proposes Emergency Regulation to Modify Meal and Rest Periods

Summary:

On Friday, December 10, 2004, the California Division of Labor Standards Enforcement (DLSE) filed with the Office of Administrative Law a proposed emergency regulation to modify the current interpretation of California's meal and rest period laws. The proposed regulation provides that:

  • Employers have met their obligation to "provide" a meal period (even if the employee doesn't actually take a meal period) if the employer has informed employees of their meal period rights and the employee acknowledges, in writing, that he or she understands those rights;
  • Employers must now provide meal periods that begin within six hours, rather than five hours, of the start of an employee's work shift; and
  • The one hour of extra pay triggered by a missed meal or rest period is a "penalty" and not "wages," and is therefore subject to a one year, rather than a three to four year, statute of limitations.

Details:

A great deal of confusion and litigation has been spawned by the California law requiring employers to pay one hour of regular pay to any employee who was not provided with a meal or rest period in accordance with California law. That requirement, which went into effect October 1, 2000, has resulted in several opinion letters from the DLSE, all of which have interpreted the law in a manner unfavorable to employers. However, on Friday, the DLSE issued a proposed regulation on this subject with a different view. Quoting a veto message given by Governor Schwarzenegger earlier this year on a related bill, the DLSE now asserts that a new regulation is urgently needed to clarify the law, increase the flexibility afforded to both employers and employees, and reduce costly litigation over meal and rest period issues. This new regulation directly overrules several of the DLSE's prior opinion letters.

The first area addressed in the proposed regulation is the circumstance where the employee does not want to take a meal period. Based on the DLSE's prior interpretation of the law, employers had to force their employees to take a meal period even if they did not want to do so, or face the possibility of penalties and potential lawsuits for missed meal periods. The proposed regulation, however, specifies that an employer will be deemed to have met its legal obligation of providing a meal period if either of the following occurs:

  • The employer: (a) makes the meal period available to the employee; (b) posts the applicable Industrial Welfare Commission (IWC) wage order; and (c) maintains accurate time records of the meal period for covered (i.e. non-exempt) employees; or
  • The employer informs the employee of the "the circumstances under which the employee is entitled to a meal period and the employee acknowledges in writing that he or she understands those rights."

This second option appears to allow an employee to waive his or her right to take a meal period if he or she has been informed of that right and elects to waive it.

The second issue addressed by the DLSE is the time parameters in which meal periods can be taken. Previously, the DLSE had opined that if an employee did not begin his or her meal period within five hours of the start of his or her shift, the employer was required to pay a one hour meal period penalty. The DLSE now notes that this interpretation of the law forced employees to take meal periods at times that were inconvenient for both the employer and the employee. More importantly, the DLSE concluded that its previous interpretation of the law was wrong. As a result, the DLSE has determined that it is only necessary that the meal period begin by the sixth hour of work, rather than the fifth hour.

Finally, the proposed regulation states that the one hour of pay, which an employer is required to pay an employee if the employee is not provided his or her rest or meal period, is a "penalty," not a "wage." Based on the DLSE's earlier interpretation that this pay was a wage, employees had argued that they could bring claims for such wages going back four years in time, and were entitled to recover interest and attorneys' fees under Labor Code sections 218.5 and 218.6. However, under the proposed regulation, with this pay being defined as a "penalty," such claims are limited to a one year statute of limitations, and the interest and attorneys' fee provisions of sections 218.5 and 218.6 do not apply. Thus, there is now less exposure for employers in this area.

What this Means:

This action from the DLSE is very significant for two reasons. First, it gives employers real relief on the meal and rest period issues, which have been the basis of a tremendous amount of litigation. It also allows employers more flexibility in scheduling meal periods and greatly reduces an employer's liability on any claims that are brought.

The flexibility afforded will be a welcome change for both employers and employees. For example, waiters who don't want meal periods because they lose tips, may soon be able to waive their right to a meal period. Similarly, a working parent who would prefer to work straight through and leave early to pick up a child from school, may be able to do so. This flexibility makes much more sense than the current interpretations.

Second, this letter may be a sign of more reasonable rules from the DLSE that benefit both employers and employees. Previous interpretations of the law seemed aimed at limiting an employer's flexibility, even if it harmed the employee in the process. This letter may be an indication that future opinions of the DLSE will be aimed at interpreting the law in a way that is beneficial to both employers and employees.

At this point, this regulation is merely “proposed” and not final. The Office of Administrative Law has until December 20, 2004, to approve or disapprove the regulation. In the meantime, there is a comment period that is open until at least December 15, 2004, for citizens to comment on the regulation. Because this regulation provides much needed relief to employers, you may wish to comment upon this proposed regulation by December 14, 2004. If you are interested in submitting a comment, please visit the OAL website. We will send out another E-Update once there is a ruling on the regulation. If it is approved, the emergency regulation will set forth how long it will be effective and then the DLSE will have to undergo the regular rule-making process in order to make the regulation permanent.

If this new regulation becomes effective, to take advantage of this new rule, employers should take the following actions:

  • Issue a written communication, either by hard copy memorandum or e-mail with a response option, reminding all non-exempt employees of their available rest and meal periods and requesting an acknowledgment that they have received that information; and
  • Ensure that the applicable Wage Order is appropriately posted. This has always been a requirement, but this letter provides a good reminder.
  • Employers who have been automatically paying the meal period penalty if their non-exempt employees do not receive a meal period in a workday, or within five hours of the start of their shift, should now modify their practices in accordance with this new guidance. In other words, if you comply with the new method of demonstrating that you have "provided" a meal period, stop paying the penalty.

This E-Update was drafted by Michael Sullivan. For more information, please contact Mr. Sullivan or any Paul, Plevin attorney at 619-237-5200.