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Pay for Missed Breaks Not Limited to Base Pay

October 25, 2021 by

The California Supreme Court recently ruled that the one hour of pay that employees are due for missed meal and rest breaks must be paid at the employee’s “regular rate of pay” – that is, at the rate of pay that includes not only the hourly base pay but other regular pay such as shift differential or non-discretionary bonus pay.

The issue arose because the law compelling an employer to pay an employee one additional hour of pay for the missed break defines the hourly rate as the employee’s “regular rate of compensation.” On the other hand, California law requires overtime to be paid at one-and-a-half times the employee’s “regular rate of pay.”

The issue presented in Ferra v. Loews Hollywood Hotel, LLC was whether the Legislature intended “regular rate of compensation” to be synonymous with “regular rate of pay,” a term long understood to encompass not only hourly wages but also nondiscretionary payments. The Supreme Court reversed a divided Court of Appeal and ruled the two terms are in fact synonymous.

The California Supreme Court rejected the Employer’s request that its decision be applied prospectively only and held that its decision shall be applied retroactively.

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