On May 23, 2022, the California Supreme Court handed down its decision in Naranjo v. Spectrum Security Services. The decision discusses the penalties recoverable by employees for an employer’s alleged failure to pay meal and rest period premiums where a proper meal or rest period is not provided. The Naranjo Plaintiffs filed a putative class action lawsuit alleging that his employer failed to provide meal and rest periods or premium compensation in lieu thereof as required by California law. In addition to premium pay for meal and rest periods, Plaintiffs also brought derivative claims alleging failure to timely pay wages at termination and failure to provide accurate wage statements. Specifically, Plaintiffs argued that because meal and rest period premiums were not paid, they also were not timely paid all wages due at termination and their wage statements were invalid because they did not reflect the premiums that were not paid.
The California Supreme Court first considered whether the alleged failure to pay premium wages for meal and rest periods, gives rise to a claim for failure to timely pay wages at termination. The Court reversed the Court of Appeals’ decision and held that premium wages for meal and rest period violations constitute “wages” that must be paid within the statutory deadlines when an employee’s employment is terminated pursuant to Labor Code § 223.
The California Supreme Court then addressed whether the alleged failure to pay premium wages gives rise to a claim for failure to provide accurate itemized wage statements. The Court similarly held that the premiums were required to be included on wage statements issued to the employees and, therefore, could give rise to such a claim.
In reaching both of the above conclusions, the Court reasoned that, though the premium pay compensates for the “unlawful deprivation of a guaranteed break, it also compensates for the work the employee performed during the break periods.” Accordingly, where an employer fails to pay premium wages for meal and rest period violations, the employer may face additional penalties for failure to provide accurate wage statements reflecting the premium wages, and further waiting time penalties for failure to timely pay wages at termination.