What do I need to know about meal break penalties as a California restaurant employer?

The meal break penalty comes into play with non-exempt employees who work six or more hours in a day. The "penalty" is a wage payment owed to the employee at their "regular rate" of pay, which is not necessarily their "normal" rate of pay.

KEY POINTS

1. Your standard company policy should be to AUTOMATICALLY pay out the meal break penalty when some misses a break. 

• This type of policy raises the bar for certifying a class action lawsuit against your business because  the California courts have ruled that any lesser policy is enough evidence, by itself, to certify a class action law suit, regardless of there being any actual wage and hour violations.

2. Meal break pay should be a separate line item on payroll. This will make it easy to identify in your payroll records, reducing the chances of litigation.

3. The "regular rate" of pay factors in all non-discretionary pay. 

• In a restaurant, this typically includes automatic gratuity/service tips, and any pre-determined bonuses (like a birthday or work anniversary bonus, a closing shift bonus, or a set sales target bonus).
  • Businesses should have a clear written policy stating how non-discretionary "tips" will be dealt with and how they will be used to calculate the "regular rate."

4. The "regular rate"  is calculated at the end of each workweek.  A pay period can span more than one work week. 

EXAMPLE:

Week 1

• • • (50 hours x $15) + ($200 service tips) + ($20 attendance bonus) = $750+200+20 = $970 total pay for the week
      • $950/50 = $19/hr = Regular Rate
        
        • TIP: $19/hr would also be the correct base rate for calculating overtime

Week 2

• • • (40 hours x $15) + ($100 service tips) + ($50 birthday bonus) = $750 total pay for the week
      
      • $750/40 = $18.75/hr = Regular Rate

5. The statute of limitations is 4 years on a wage and hour claim in California. When truing up missed wages, this is how far back you should go. 

6. The meal break should be scheduled and taken between the 2.5 and five hour mark to:

• limit the likelihood of owing a second meal break during the same work day
• reduce the chances that an employee will get caught up in a project and miss the permissible window for taking the break (before the 6th hour of work begins).

7. Meal break time does not count as work, so each meal break should be calculated on it's own set of 5 hours (applies when there is a second break required). 

8.  Exceptions

• Employees who work 6 or less hours can waive the first meal period. 
• Employees who work 12 or less hours can waive the second meal period (but not the first).

9. Blanket meal break waivers are most useful when an employee's regular schedule is in line with exceptions noted above. Employees who typically work between six and 10 hours should sign a separate waiver each time they voluntarily miss a break.