The California Supreme Court recently issued a decision holding that employers must pay employees according to their “regular rate” rather than according to their straight-time hourly rate. The case applies retroactively and thus applies even to California employment cases that have already been decided and to previous miscalculations.
In the case, Ferra v. Loews Hollywood Hotel, LLC, the plaintiff filed a complaint against her employer, alleging that the employer improperly calculated her payment for non-compliant meal periods and rest periods. Under California law, employers must also provide employees with required meal, rest, and recovery periods. Under section 226.7 of the California Labor Code, if an employer fails to provide an employee with a compliant meal, rest, or recovery period, the employer must pay the employee an additional hour of pay at the employee’s “regular rate of compensation.” Under another section of the Code, California employers are required to provide their employees with overtime pay when employees work more than a certain amount of time. Overtime pay is calculated by multiplying the employee’s “regular rate of pay,” which factors in all wages and other non-discretionary earnings, such as non-discretionary bonuses and incentive compensation.
The Supreme Court’s Decision
The issue before the Supreme Court was the meaning of the phrase “regular rate of compensation.” The defendant employer argued that the employee only had to be paid her hourly wage for non-compliant periods. The employee, on the other hand, argued that her pay had to reflect adjustments to the hourly wage for non-hourly compensation employees earned during the pay period.
The court held that “regular rate of compensation” was meant to be interpreted in the same way that “regular rate of pay” is used in the overtime context under Labor Code section 510. The court looked at the regulatory and legislative history of the statute and decided that the intent was that the phrases “regular rate of compensation” and “regular rate of pay” were meant to have the same meaning.
This decision means that the pay for non-compliant periods must be paid at a “regular rate” rather than the employee’s straight hourly wage—meaning that a non-compliant meal, rest, or recovery period must be calculated by factoring in all wages as well as other non-discretionary payments for work. The decision is retroactive, meaning that employees who failed to be properly paid will be able to recover compensation for payments that were already made.
California Employment Lawyers Fighting for Workers
If you believe your wages were miscalculated you may be entitled to compensation and may be able to recover it through a California wage and hour lawsuit. The California employment lawyers at The Nourmand Law Firm assist employees in Los Angeles, San Bernardino, and Riverside Counties, as well as Oakland, Sacramento, and other areas. We have represented employees in California for over 20 years and we strive to ensure that our clients’ rights are protected in disputes with their employers. To schedule a free consultation, fill out our online form or call us at 310-553-3600.