e-Bulletin: California DLSE Proposes New Regulations Governing Employee Meal Periods

On December 10, 2004, the California Division of Labor Standards Enforcement (“DLSE”) filed emergency regulations with the Office of Administrative Law (“OAL”) seeking to alleviate growing confusion and litigation concerning employees’ entitlement to meal periods in the workplace.  Pursuant to the OAL’s emergency rulemaking procedures, the OAL had 10 days to approve or disapprove the proposed regulations which would have taken effect on December 20, 2004.  However, on the 10th day, the DLSE elected to withdraw the emergency regulations and resubmitted them pursuant to the OAL’s regular rulemaking procedures.  This prevented them from taking immediate effect and will allow interested parties to submit written comments and attend public hearings before the OAL reaches a decision to approve or reject them.  Public hearings have been scheduled for February in Los Angeles, San Francisco and Fresno.

If approved, the proposed regulations will significantly clarify the application of the statutes related to employee meal periods, providing employers with more flexibility in scheduling and reducing the overall burden on employers to demonstrate that required meal periods were provided when they are faced with enforcement actions.  However, it should be noted that public agency employers are exempt from meal periods mandated by the Industrial Welfare Commission, and public employers should look to the federal Fair Labor Standards Act for laws affecting employee scheduling.

Meal Period Requirements Under the California Labor Code

California Labor Code section 512 provides that if an employee works for a period of five hours, the employer must provide the employee with a meal period of no less than 30 minutes.  This requirement may be waived by a mutual agreement between the employer and the employee if the total work period per day is no more than six hours. Section 512 further provides that if an employee works for a period of 10 hours, the employer must provide the employee with a second meal period of no less than 30 minutes.  This requirement may also be waived by a mutual agreement between the employer and the employee if the total work period per day is no more than 12 hours and the first meal period was taken.

The enforcement of this provision is governed by Labor Code section 226.7 which prohibits employers from requiring employees to work during any meal or rest period mandated by the Industrial Welfare Commission.  If the employer fails to provide a required meal or rest period, “the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.”

The enactment of sections 512 and 226.7 in 1999 and 2000, respectively, has resulted in growing confusion among employers on the application of these provisions, and conflicting interpretations have resulted in expensive lawsuits against employers.  Further, the floodgate of litigation has done little to clarify the meaning of the statutes or give employers meaningful guidance on their responsibilities in this area. 

The Proposed DLSE Regulations

The proposed regulations clarify the law in three areas:

1. The first area concerns whether the “one additional hour of pay” that employers may be liable for under section 226.7 constitutes a wage or a penalty.  In prior administrative opinion letters the DLSE had interpreted the payment as a wage. This was inconsistent with the legislative history which clearly indicated that the payment was meant to be a penalty.
   
   The proposed regulations unequivocally state that any amount paid by the employer pursuant to section 226.7 “is a penalty and not wages.”  This is significant because if the payment is a wage, a three- or four-year statute of limitations applies, and the employee may recover attorneys’ fees, costs and interest.  If the payment is treated as a penalty, only a one-year statute of limitations will apply and attorneys’ fees, costs and interest will not be recoverable by the employee.
   
2. The second area relates to the time parameters in which an employee can take a meal period.  In prior administrative opinion letters, the DLSE interpreted section 512 to require the employer to provide the employee with a meal period before the fifth hour of work commenced.  This has resulted in employers being penalized even where meal periods were routinely provided at the end of the fifth hour of work.  As a result, employers began forcing their employees to take mandatory breaks earlier than the fifth hour, even if the employees had no desire or need to do so.
   
   The proposed regulations purport to interpret the requirements based on a more sound reading of subsections (a) and (b) together.  Reading the two subsections together, the intent of the statute shows that the legislature did not mean that employees must complete a meal period before the expiration of the fifth hour.  The legislature intended to give the employer and the employee a more flexible window of time in which to take a meal period.  Therefore, the proposed regulations indicate that the meal period may commence “at any point before the sixth hour of work.”
   
3. The third area relates to the interpretation of the language, “providing the employee with a meal period.”  To avoid litigation and penalties, employers have been strictly interpreting this language and forcing their employees to take a meal period even if the employee would prefer to continue with their work.
   
   Under the proposed regulations an employer will be deemed to have “provided the employee with a meal period” if the employer: (a) makes the meal period available and affords the employee an opportunity to take it; (b) posts the applicable order of the Industrial Welfare Commission; and (c) maintains accurate time records for covered employees.  An employer may also establish that meal periods have been provided if the employer informs an employee of the circumstances under which the employee may take a meal period and the employee signs a written acknowledgment.

The OAL’s traditional rulemaking process, under which the proposed regulations have now been submitted, is a longer process, but it is by no means endless.  In general, the agency must allow a minimum 45-day period for written comments and public hearings to ensure a meaningful opportunity for the public to participate in the adoption of agency regulations that may affect their daily lives.

Best Best & Krieger will continue to monitor the status of the proposed regulations and post updated information at www.bbklaw.com  when it is available.  During this period, employers should consult with their legal counsel or contact an attorney with BB&K's Labor & Employment Practice Group  to prepare for the significant changes the new rules will present if they are ultimately approved by the OAL.