Good News for Employers: No Derivative Penalties for Meal or Rest Break Violations

Any employer that has faced a wage & hour lawsuit in California knows that minor violations can quickly add up to significant liabilities.

This is because a violation of one Labor Code often leads to violations of other Labor Codes. For example, if an employer doesn’t pay an employee an overtime premium on a day the employee works over eight hours (a violation of Labor Code § 510), that failure can give rise to waiting time penalties under Labor Code § 203 (a statute that penalizes an employer for failing to pay an employee all wages owed at the time of termination).

One hotly litigated issue in wage & hour lawsuits is whether the failure to pay a meal or rest period premium (e.g., when an employee is deprived of a meal or rest period in violation of Labor Code § 226.7) gives rise to derivative penalties under Labor Code §§ 203 and 226 (for inaccurate wage statements). The Court of Appeal in Naranjo v. Spectrum Security Services, Inc. resolved this issue in favor of employers finding: “[Labor Code] section 226.7 actions [for meal and rest break violations] do not entitle employees to pursue the derivative penalties in sections 203 and 226.”

This is a big win for employers since 203 and 226 penalties can be significant, and a violation of Section 226 entitles an employee to recover attorney fees and costs.