California Supreme Court to Decide Time Limits on Meal Break Violations

On February 22, 2006, the Supreme Court agreed to hearMurphy v. Kenneth Cole Productions, Inc. and will address whether California employers are liable for three years of back pay, with additional penalties, if workers prove that they have been illegally denied meal and rest periods. Currently, appellate court decisions are in conflict on whether a oneyear or three-year statute of limitations period applies to meal break violations. The Supreme Court's decision will have a significant impact on employers' financial exposure. Consider Wal-Mart, who this last December was hit with a verdict for $172,268,673 in a large class action alleging failure to provide meal and rest breaks. In the Alameda County case, Judge Ronald Sabraw ruled that the damage payments for missed meal periods constituted "wages" and not a "penalty," thereby effectively increasing the award by over $100,000,000.

Under state law, an employer who fails to provide employees with a required meal or rest period must pay the employee an extra hour's pay for each day the required break was not furnished. If the payments are considered a penalty, the employee or former employee must file a claim within one year, but if the payments are wages, the statute of limitations goes back three years. Further, if the payments are deemed wages, an employer may be liable for additional waiting time penalties for failure to make the payment on the payday of the pay period during which the violation took place. Also, if the payments are classified as wages, an employer's withholding obligations are triggered.

A ruling is expected in six months to a year. Stay tuned.

- Elisabeth A. Madden