California Supreme Court Resolves Issue of Time Limits for Meal/Rest Period Claims

Yesterday, in a highly anticipated decision, the California Supreme Court dealt a disappointing blow to California employers when it rejected the argument that the statute of limitations for meal/rest period violations is 1 year and ruled, instead, that employees filing such claims may seek damages going back 3 years in time.
(Murphy v. Kenneth Cole Productions, Inc., April 16, 2007.)

California's Labor Code and Industrial Welfare Commission Wage Orders impose strict meal and rest period obligations on employers. At issue in Kenneth Cole was Labor Code section 226.7, which states that an employer failing to provide a proper meal or rest period shall pay the employee one additional hour of pay.

The question before the Court was whether this one additional hour of pay is a "wage" (subject to a 3-year statute of limitations) or a "penalty" (subject to a 1-year statute of limitations). In concluding that it is a wage, not a penalty, the Court, in a unanimous 7-0 decision, relied on the express language of Labor Code section 226.7 and its legislative history. In conjunction with California's Business and Professions Code section 17200, the effect of this ruling is 4 years of potential liability for meal/rest period claims.

Because this decision may spark a new round of meal/rest period class action lawsuits, employers are strongly encouraged to carefully review their policies and procedures for compliance with California law.

The Allen Matkins Labor & Employment Law Department is handling numerous cases involving meal/rest period issues and is closely monitoring developments in this area.