Penalties for Violations of the Business & Professions Code

Labor Code §§ 226.7 and 512 and the applicable wage orders require Defendant to authorize and permit meal and rest periods to its employees. California law prohibits employers from employing an employee for more than five hours without a meal period of at least 30 minutes. “[A]n employer’s obligation is to provide an off duty meal period: an uninterrupted 30–minute period during which the employee is relieved of all duty.” Brinker Rest. Corp. v. Super. Ct., 53 Cal. 4th 1004, 1035 (2012). “An employer must relieve the employee of all duty for the designated period.” Id. at 1034.

An employer cannot “impede or discourage [employees] from [taking off-duty rest periods].” Id. at 1040. Section 226.7 and applicable wage orders also require employers to authorize and permit employees to take 10-minute rest periods for each four hours or major fraction thereof of work, and to pay employees their full wages during their rest periods. “[A]s a general matter,” one rest break should fall on either side of the meal break.” Id. at 1032.

Unless the employee is relieved of all duty during the 30-minute meal period and 10-minute rest period, the employee is considered “on duty” and the meal or rest period is counted as time worked under the applicable wage orders. Augustus v. ABM Security Services, Inc. (2016) 2 Cal.5^th 257, 264.

When an employer fails to provide a rest or meal period in accordance with the applicable wage orders, the employer must pay the employee one additional hour of pay at the employee’s regular rate of pay for each workday that a required rest period is not provided, and one additional hour of pay for each work day that a compliant meal period is not provided. Labor Code § 226.7.

The Industrial Welfare Commission (IWC) Wage Orders define “hours worked” as the “the time during which an employee is subject to the control of an employer and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” Labor Code § 1194(a) provides that employees are entitled to recover the unpaid balance of their minimum wage or overtime compensation. Specifically, § 510 requires an employer to pay overtime compensation at one and one-half times the regular rate of pay for an employee where the employee works more than eight hours in a day or forty hours in a week.

Labor Code §§ 201-203 require an employer to pay all wages owed to an employee who has been discharged or who has quit. If the employer fails to pay an employee all wages owed within the statutorily required time period, § 203 calls for a penalty on the employer equal to one day’s rate of pay for each day the employer fails to pay, for a time period not to exceed 30 days.

A willful failure to pay wages within the meaning of § 203 occurs when an employer intentionally fails to pay wages to an employee when those wages are due. Rivera v. Rivera, No. 10-CV-01345-LHK, 2011 WL 1878015 at *7 (N.D. Cal. May 17, 2011). The standard for willful is not high: “[t]he employer’s refusal to pay need not be based on a deliberate evil purpose to defraud workmen of wages which the employer knows to be due.” Id.

Recently the California Supreme Court has called into question whether a rounding practice is appropriate when technology is available to accurately track the actual hours worked by employees. Troester v. Starbucks Corp. (2018) 5 Cal.5^th 829. Though the Supreme Court in Troester did not find any rounding practice to be unlawful, it noted (citing See’s Candy Shops, Inc. v. Sup. Ct. (2012) 210 Cal.App.4^th 889) that a rounding practice is only valid “if the rounding policy is fair and neutral on its face and ‘it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.’”

California courts have interpreted § 17200 of the Business and Professions Code broadly, and have consistently held that a violation of any law or statute can serve as the predicate for pursuing a § 17200 claim. Isuzu Motors Ltd. v. Consumers Union of U.S., Inc., 12 F.Supp.2d 1035, 1048 (C.D. Cal. 1998). If an employer is found to be in violation of the Business and Professions Code as a result of the violations mentioned above, the limitations period extends to four years.