Brinker: California Supreme Court Clarifies Standards for Meal Periods - Steps Employers Should Take Now

In California, employers have been challenged for years in dealing with how to comply with cumbersome and vague meal and rest period rules. The issues confronted by employers have included: What does it mean to "provide" a meal period? Do meal periods have to be provided in rolling five-hour increments? Are early (or late) lunches allowed? Must employers ensure that their employees actually take these mandated breaks? Employers in California have spent millions of dollars to battle and/or settle countless individual lawsuits and class actions alleging meal and rest period violations. Today the California Supreme Court issued its long-awaited decision in Brinker Restaurant Group v. Superior Court of San Diego answering these questions and more.

Issues Considered By The Supreme Court

• In its review of the Brinker case, the California Supreme Court clarified and confirmed a number of issues relating to an employer's obligations under California Labor Code § 512(a) and the wage orders which state that employers must "provide" meal and rest periods to employees. The key issues considered by the Supreme Court included:
• How does an employer "provide" meal periods? In order to "provide" a meal period, does the employer have to make the breaks available to employees who may voluntarily choose not to take them, or is the employer required to ensure employees take meal periods?
• When does a meal period have to be provided? Can the meal period be taken within the first hour of work? Does the meal period have to begin before the fifth hour of work?
• Is a meal period required every five hours on a rolling basis?
• When do rest breaks need to be provided? Can the meal period be provided before the first rest break?
• Are meal and rest period claims suitable for class action adjudication?

Summary Of The Supreme Court's Ruling

The California Supreme Court ruled as follows regarding meal and rest periods:

• An employer’s obligation to "provide" a meal period is satisfied if the employee (1) is relieved of all duty for an uninterrupted thirty minute period, and (2) is free to leave the work premises. The employer's obligation is to "relieve the employee of all duty," with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires.
• An employer need not "ensure" that no work is done during a meal period. If an employer relieves the employee of all duty, the employer is not liable for a meal period premium if the employee chooses to work (unless the employee is pressured by the employer to work). However, if the employer knew or reasonably should have known that the employee was working during the meal period, the employer will be liable for payment of the employee's regular (or overtime) wage for such time worked.
• The first meal period must be provided after no more than five hours of work. If an employee is entitled to a second meal period, it must be provided after no more than ten hours of work.
• The "rolling" 5-hour interpretation is incorrect: there are no timing requirements for meal periods aside from the 5th and 10th hour limits. Therefore, once the meal period has been taken, there is no requirement that the employee take another meal period unless and until the employee has worked ten hours -- even if more than five hours is worked since the first meal period.
• Rest breaks and meal periods do not need to be taken in a certain order. The first meal period can occur before the first rest period. However, in the context of an eight hour shift, "as a general matter," one rest break should fall on either side of the meal period.
• A ten minute rest period is owed for every major portion of four hours worked after an employee works three and one-half hours. Thus, employees are entitled to ten minutes rest for shifts from three and one-half to six hours, twenty minutes for shifts of more than six hours up to ten hours, thirty minutes for shifts of more than ten hours up to fourteen hours, and so on.
• Meal and rest period claims can be suitable for class action adjudication where the employer has a uniform policy or practice which is in conflict with meal and rest period requirements.

Background Of The Brinker Case

By way of background, the case was originally filed in 2004 as Hohnbaum v. Brinker Restaurant Corp. The lawsuit was filed by five non-exempt restaurant employees of Chili's who claimed the restaurant illegally denied them meal and rest breaks. The employees challenged the restaurant's practice of having employees take "early lunches" shortly after starting work and then working employees another five to ten additional hours without receiving another meal period. They also claimed that they should have received a rest break before the first meal period. The employees also alleged that they worked "off-the-clock" during meal periods.

The employees asked the trial court to certify a class of employees extending back four years. They argued that class treatment was appropriate because the court could look to the company's standard policies and practices and time card records to determine that meal period violations occurred. Brinker argued that meal periods need only be "provided," as set forth in the Labor Code. Whether or not any particular manager discouraged or prohibited the taking of a break is a matter that must be decided on an individual basis, Brinker contended, and not as a class action.
The complaint was certified as a class action suit that was estimated to include potentially more than 60,000 current and former employees. Brinker appealed the class certification order.

The Court of Appeal held in favor of Brinker on a broad range of issues concerning when an employer's obligation arises to "provide" meal and rest periods to its employees. It held that an employer's obligation to "provide" employees with a meal period means that the employer must make meal periods "available," not "ensure" they are taken. The court also discussed that, in all but rare cases, meal and rest period claims are not appropriate to be litigated as class actions because a failure to "provide" must be decided on a "case-by-case basis," and struck down class status for the more than 60,000 hourly restaurant workers.
On October 22, 2008, the California Supreme Court granted review of the Court of Appeal decision. The case has been pending at the Supreme Court for almost 3½ years.

Analysis Of The Supreme Court's Ruling

The Supreme Court's unanimous decision focuses on the certification of the three meal, rest, and off-the-clock classes and subsequent reversal of the class certifications by the Court of Appeal, but nonetheless answers several important substantive questions in the process. Pointing out the plaintiffs' evidence of uniform employer policies, the court held that the trial court had properly certified the rest period class. Although the Supreme Court found that the trial court had made a mistake of law that rendered the meal period class overbroad, the court implied that, on remand, a corrected meal period class could possibly be certified. Because the plaintiffs provided no evidence of any common policy or practice that would require employees to work off-the-clock during their meal breaks, the court held that the off-the-clock class should not be certified.

Addressing the Court of Appeal's reversal of the class certifications, the Supreme Court stated that the need to address threshold legal or merits questions prior to class certification is rare and likely inapplicable in most meal and rest period cases, and that class certification is still a viable method for resolving such claims. Thus, the result on the certification issue is a mixed bag for employers: the court has left the door open for trial courts to certify classes, but the court also made clear that in the absence of a uniform policy or practice, certification is inappropriate and potentially an abuse of the trial court's discretion.

In a concurring opinion entered into by only two of the seven justices, however, several additional troubling issues were raised. The concurring opinion took the Supreme Court's assessment of the class certification issues one step further, essentially surmising that the necessity of individualized inquiries as to whether individual employees received breaks in accordance with an employer's policy was not a threshold issue to be considered in assessing class certification, but rather merely impacted potential damages and was therefore not a basis for denying certification. Further, the concurring opinion addressed a question not included in the majority opinion: whose burden it is to prove whether employees waived their meal periods. Relying on recordkeeping requirements under Wage Order No. 5-2001, the concurring opinion stated that any meal period not recorded is presumed to have neither been taken nor waived and that the employer must prove the contrary as an affirmative defense. Although the concurring opinion is not binding law, it raises worrying possibilities regarding the burdens an employer may face in defending class actions.

On the other hand, the Supreme Court's unanimous holdings on the substantive labor law issues were much more favorable. Resolving several long-standing questions of statutory and Wage Order interpretation, the court discarded a number of complicated, difficult to enforce theories recently advanced by plaintiffs' counsel in favor of straightforward readings.

With respect to meal periods, the Supreme Court made three particularly significant pronouncements: (1) an employer must relieve an employee of all duty for a meal period, but need not ensure that the employee does no work; (2) if work does continue, the employer will not be liable for premium pay but will only have to pay for actual time worked if it “knew or reasonably should have known that the worker was working through the authorized meal period”; and (3) the only restrictions on the timing of meal periods is that a first meal period must be before the start of the sixth hour of work and a second meal period – if any – must likewise be before the eleventh hour of work. The court provided both more freedom to employees and to employers, who are not forced to comply with the impractical and onerous burdens advanced by the plaintiff's theory.

The Supreme Court also addressed the number and timing of rest breaks, again taking a common-sense and straightforward approach to interpreting the language of the Labor Code and Wage Orders. Explaining the language regarding the "major fraction" of four hours worked that entitles an employee to a ten-minute rest break, the court clarified that a "major fraction" means, simply, more than half: any amount of time over two hours. Ensuring that there could be no further misunderstanding, the court explicitly concluded that: "Employees are entitled to 10 minutes' rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on." The court rejected any strict requirements regarding the timing of the rest break, explaining that no limitations appeared on the face of the Labor Code or Wage Orders except that "employers are . . . subject to a duty to make a good faith effort to authorize and permit rest breaks in the middle of each work period." The court stressed that the issue of timing is flexible: where practical considerations make placing the rest breaks in the middle of work period infeasible, employers are not required to do so.

In a final note of good news for employers, the Supreme Court also noted that, for purposes of resolving factual questions regarding whether employees received breaks or worked during those breaks, evidence that employees clocked out creates a presumption they are doing no work. Plaintiffs, whether in a class action or otherwise, have the burden to rebut that presumption. Although a seemingly minor aspect of the decision, this recognition of the value of time records by the Supreme Court may have a significant effect on litigation where employers are diligent in requiring employees to record their meal periods.

Steps Employers Should Take Now

The California Labor Code requires that an employer must pay a nonexempt employee one hour of pay for failure to provide a meal or rest break in accordance with an applicable order of the Industrial Welfare Commission. With the California Supreme Court having now clarified when that one hour of pay will be owed, employers should implement the following best practices to comply with meal and rest period obligations:

ADVISE:

Make sure employees are well informed that they are authorized and permitted to take meal and rest periods every day by (1) maintaining a well-written meal and rest period policy in the Employee Handbook, and (2) prominently displaying that policy along with all other employment-related posters on the company bulletin board and/or by the time clock.

Consider implementing "pop ups" or other electronic advisements into the timekeeping system and/or the log-in and log-off systems at individual computers providing weekly reminders about breaks.

ACKNOWLEDGE:

Require all new employees to sign a document at the time of hire that advises the employee of his/her right to take meal and rest periods.

Consider including an acknowledgment on time records where the employee confirms that he/she took all meal and rest periods during such payroll period.

Require employees to complete a form any time an employee states that a meal period is missed (e.g., require a written report to HR to document whether the break was missed voluntarily, or whether the employee was dissuaded or prevented from taking the break.)

Obtain applicable written meal period waivers.

IMPLEMENT:

Periodically publish a "Reminder" to current employees regarding the company's meal and rest period policy.

Consider formally scheduling meal and rest periods into work schedules.

Analyze whether to assign one employee as a "breaker" to fill in while others take meal and rest breaks.

Consider programming electronic time system so employees cannot clock back in after a meal period earlier than 30 minutes.

Regularly train staff and management on meal and rest break rules using standardized training materials.

REVIEW:

Periodically review timecard records to determine whether employees are accurately reporting meal periods.

DISCIPLINE AND COUNSEL:

Discipline and counsel any supervisor who dissuades or instructs employees to miss meal or rest periods.

Discipline employees who fail to record meal periods they took and/or who otherwise violate the company's meal and rest period policies.