DLSE Meal Period Regulations Poised to Become Final as Legislature Takes Steps to Change Them

What Can Employers and Employees Expect in 2006?

by RICHARD E. QUINTILONE II, ESQ. (www.worklaw.cc)

The continued debate over the California Labor Code’s meal period regulation (Wage Order 4-2001) continues to attempt to balance the realities of workplace with the rule of law. Regulations promulgated by the Schwarzenegger administration, aimed at disposing of a strict liability standard and restricting liability to those employers who actually prevent employees from taking the meal periods to which they are entitled, are set to become final while challenges in the Court continue. Meanwhile, the Legislature is taking steps to void those regulations as contrary to law and in excess of jurisdiction.

It is increasingly clear from these developments that meal periods have become a political skirmish in the ongoing contest between California's Republican governor and its Democratic-controlled Legislature.

Business understandably wants a limit on the strict liability exposure while Employees and Unions want fair and tolerable working conditions in the workplace. The balance of power in both branches may spell out the future of the current regulations

What can employers and employees expect in 2006?

A short explanation of the framework surrounding the regulations may be important to understand our current political climate

Background of Wages, Hours and Working Conditions in California

Wages, hours, and working conditions are generally governed by Labor Code § 1171, et seq. These provisions apply to men, women, and minors employed in any occupation, trade, or industry, whether their compensation is measured by time, piece, or otherwise, but do not include any individual employed in outside sales or in a national service program such as AmeriCorps that is carried out with federal assistance.

The California wage orders, promulgated by the Industrial Wage Commission (“IWC”) [see Labor Code §§ 1173, 1182 ] and codified in Title 8 of the California Code of Regulations [see 8 Cal. Code Reg. § 11000 et seq. (California Wage Order Nos. MW-2001, 1-2001-17-2001 (www.dir.ca.gov/IWCWageOrderIndustries.htm)], are administrative regulations that set forth requirements for minimum wages, overtime compensation, and working conditions in various industries and occupations in California.

Wage orders may be adopted, amended, or rescinded by the IWC pursuant to procedures set forth in the Labor Code [see Labor Code §§ 1173, 1176-1182.1, 1182.5, 1182.7, 1184-1190 ], and are expressly exempted from the usual procedures for adopting administrative regulations set forth under Government Code § 11346 et seq. [Labor Code § 1185 ]. In non-lawyer speak, this means they can effectively become “law” via an administrative regulation, without many of the safeguards in place for other agencies and their regulations.

The California Legislature de-funded the IWC, effective July 1, 2004. However, the IWC wage orders remain in effect, and the Division of Labor Standards Enforcement (“DLSE”) will continue to make employers strictly liable for non-compliant meal periods. According to the DLSE, it will continue to enforce the provisions of the wage orders [see Labor Code § 61]. De-funding is a way the legislature effectively cuts off an agencies ability to operate.

The provisions of the various wage orders differ in many respects. Of the wage orders promulgated by the IWC, twelve are ''industry'' orders, each of which applies to persons employed in the industry specified in the particular order [see 8 Cal. Code Reg. §§ 11010-11030, 11050-11130 ( Cal. Wage Order Nos. 1-2001-3-2001, 5-2001-13-2001) ]; four are ''occupation'' orders that apply to persons employed in specified types of occupations [see 8 Cal. Code Reg. §§ 11040, 11140-11160 ( Cal. Wage Order Nos. 4-2001, 14-2001-16-2001) ]; and one is a general minimum-wage order applicable to all California employers [see 8 Cal. Code Reg. § 11000 ( Cal. Wage Order No. MW-2001)].

There is also a all-inclusive Order, Miscellaneous Employees, covering ''[a]ny industry or occupation not previously covered by, and all employees not specifically exempted in, the Commission's wage orders in effect in 1997, or otherwise exempted by law'' [see 8 Cal. Code Reg. § 11170 (Cal. Wage Order No. 17-2001); see also Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999, 1999 Stats., ch. 134 (A.B. 60)].

Meal Period Wage Orders in California

For years, California's Wage Orders have required meal periods for certain non-exempt employees. The meal period provision, found in Wage Order 4-2001, § 11(A), states in relevant part:

No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day's work, the meal period may be waived by mutual consent of the employer and the employee.

In 2000, the Legislature and the IWC empowered the regulation with an enforcement mechanism. Under newly enacted Labor Code section 226.7 and a new Wage Order provision, any day the employer fails to ''provide'' the requisite meal period, the employer is obligated to give the employee an extra hour of pay. A similar rule applies to rest periods, also the subject of controversy and numerous wage and hour class actions.

An explosion of class action and unfair business practice litigation over meal and rest periods ensued. The explosion was fueled by an enforcement policy adopted by the DLSE, a meal period is non-compliant when it is completely missed, not completely duty-free, taken more than five hours into an eight-hour day, or is less than a full 30 minutes long. www.dir.ca.gov/dlse/DLSEManual/dlse_enfcmanual.pdf, pp. 176-177 (last checked April 8, 2006).

Like many provisions of the Labor Code, regardless of whose fault the non-compliant meal period is, the employer is liable for the one-hour premium. The DLSE's interpretation placed employers in the role of enforcing meal and rest periods, requiring them to manage meal periods, rest periods and discipline any employee who decided to skip a meal period or take a short or late lunch.

Some employers have taken a different tact and placed employee’s in “break hell” requiring them to come in 30 minutes before or after a shift, sit and do nothing (the alleged “rest” or “meal period”) other than document the meal and rest period were provided. This conduct has prompted a response by the Legislature and Employee Right's advocates alike.

Penalty or Wage?

Aside from the issue of no-fault liability, this litigation has also raised the issue of whether the one-hour premium is a ''penalty'' or a ''wage.'' The answer determines the applicable statute of limitations, which is one year for penalties and three years for wages. It also determines whether former employees who did not receive a premium for any missed meal or rest period would be entitled to waiting time penalties -- up to 30 days of pay for having left their employment without having been paid all earned ''wages.'' Finally, lawyers have a dog in the fight as it is unclear if attorneys fees can be awarded for pursuit of penalties, where it is clear they are recoverable for wages. Thus, the distinction between penalty and wage makes a quantum difference in damages if the case involves hundreds or thousands of current and former employees.

The Regulations Originally Proposed

In December 2004, the DLSE, under Governor Schwarzenegger, attempted to dampen the litigation explosion by issuing emergency meal and rest period regulations. The regulations not only made clear that the premium was a penalty, but also that employers would be liable for the premium only if they prevented employees from taking a meal period. There would be no premium due when employees decided on their own to skip or take a end of the shift meal period. Less than a week after it issued these emergency regulations, a storm of protest from unions and trial attorneys erupted. The DLSE withdrew the “emergency regulations.” Instead, it issued similar proposed regulations for notice and comment under the Administrative Procedures Act. The DLSE held hearings on the proposed regulations in February and March 2005 at various locations in California. Two consistent themes emerged from these hearings. On one hand, employees want the flexibility to skip meal periods entirely or to schedule them for their own convenience. On the other hand, significant concerns exist about meal period abuse by agricultural employers and others.

The April 2005 Modifications to the Proposed Regulations

In April 2005, the DLSE issued modified meal period regulations for notice and comment. The modified regulations, like their predecessors, define the one-hour premium for each meal period violation as a penalty and not a wage. Under the modified regulations, an employer ''provides'' the required meal period by affording the employee an opportunity to take it. Specifically, the obligation to ''provide'' a meal period is satisfied by:

1. Informing the employee of the right to take a meal period and that the employee will suffer no retaliation from exercising this right;

2. Affording the employee the opportunity to take the meal period; and

3. Maintaining accurate time records of meal periods or otherwise proving that the meal period was actually ''provided.''

The regulations also clarify that the employer's duty to ''provide'' a meal period is triggered only at the point the employee has worked five hours. Thus:

1. There is no duty to provide a meal period to an employee who works a period of five hours or less.

2. Where the work period exceeds five hours, the employer must ''provide'' the meal period before the work period exceeds six hours. This represents a change from the DLSE's prior enforcement policy that the meal period must begin within five hours of the start of work.

3. If the total work period does not exceed six hours, the employee and employer may waive the meal period by mutual agreement.

4. If the total work period exceeds ten hours, the employer must provide a second meal period. This second meal period may be waived by mutual agreement, so long as the employee does not work more than twelve hours and the first meal period was not waived.

The notice and comment period for those proposed regulations closed on April 22, 2005.

The May 2005 Modifications to the Proposed Regulations

On May 9, 2005, the DLSE issued additional modifications to the proposed regulations.

www.dir.ca.gov/dlse/MRPRegs.htm (last checked April 8, 2006).

In May 2005, the modifications have the following material features:

1. The requirements for a presumption of compliance have been revised. Under the new regulations, an employer will be deemed to have provided a meal period if it (a) informs the employee, either orally or in writing, of the right to take a meal period; (b) affords the employee the opportunity to take the meal period; and (c) maintains accurate time records. Additionally, notwithstanding these specific criteria, an employer may establish by a preponderance of the evidence that a meal period was actually made available to the employee, and the employee was actually afforded the opportunity to take the meal period, with other evidence.

2. The regulation has been modified to state that a meal period must be provided ''before the work period exceeds six hours.'' While ambiguous, this language seems to suggest that the meal period must be completed, rather than merely commenced, by the end of six hours.

3. The modifications do not change the regulations' provision that an employee's remedy for not being provided a meal or rest period is a penalty, not a wage. Thus, as discussed above, the statute of limitations would be one year.

The July 2005 Modifications to the Proposed Regulations

On July 7, 2005, the DLSE again issued additional modifications to the proposed regulations. www.dir.ca.gov/dlse/MRPRegs.htm (last checked April 8, 2006).

The new modifications have the following material features:

1. A meal period as required by Labor Code Section 512(a) must be provided may begin before the completion of the sixth hour of work period exceeds six hours the end of the sixth hour of the work period. The employer cannot waive its obligation to provide the meal period. However, an employee may initiate a request for approval from his/her employer to: (A) not take the meal period for that day or (B) take only a portion of the meal period for that day. The employer has the discretion to approve or deny the request. The employer’s approval or denial of such a request is not a violation of the employer’s duty to provide a meal period.

2. Further, the proposal gives a helpful example and chart to determine when and how a meal period should be provided, as seen below, as well as another Example to keep employers in compliance.

Example: A non-exempt employee begins work at 8:00 a.m. The employee’s regular work schedule is 8:00 a.m. to 4:30 p.m. with a 30 minute meal break. However, the employee wishes to leave by 4:00 p.m. that day in order to take his son to a doctor’s appointment. The employee requests approval from his employer not to take the meal period that day in order to leave work 30 minutes earlier. After reviewing the operational needs of the company for that day, the employer approves the employee’s request to not take his meal period. At 2:00 p.m., the employer provides a meal period to the employee by giving the employee the opportunity to take the meal period However, the employee does not take his meal period. The employee leaves work at 4:00 p.m.

Illustrative table Regarding Meal Periods

Hours into the work period	Example of time based on a work period that begins at 8 a.m.	Meal Period Event triggered	Exceptions
Prior to, and including, 5 hours	8:00 a.m. to 1:00 p.m.	None	Employer may provide a meal period
Anytime between 5 hours, 1 minute and 5 hours, 59 minutes	1:01 p.m. to 1:59 2:00 p.m.	Employer must provide a 30 minute meal period if one has not already been provided	Employer and employee can mutually waive the employer’s obligation to provide a meal period only if the employee’s work period does not exceed 6 hours
Anytime between 6 hours, 1 minute and 10 hours	2:01 p.m. to 6:00 p.m.	No additional meal period	No additional waiver rights
Anytime between 10 hours, 1 minute and 12 11 hours, 59 minutes	6:01 p.m. to 8:00 7:59 p.m.	Employer must provide a second 30 minute meal period	Employer and employee can mutually waive the employer’s obligation to provide a second meal period, but only if the first meal period was not waived and the employee’s work period does not exceed 12 hours

Proposed Legislation to Defeat the New Regulations

During this time, the Legislature is actively pursuing its own solution as a resolution seeking to void the regulations is making its way through the Legislature. The resolution, ACR 43, introduced in the Assembly by members Horton and Koretz, declares that the DLSE's ''proposed regulation is inconsistent with existing law.'' The resolution further declares that the DLSE does not have authority to promulgate the proposed regulation, and that the sole authority to regulate meal periods rests with the Legislature or with the Industrial Welfare Commission pursuant to legislative delegation. The Assembly adopted the resolution on April 14, 2005.

On May 5, 2005, it was referred to the Senate's Labor and Industrial Relations Committee.

Conclusion

It appears that the Governor’s office and the Legislature are again trying to regulate every aspect of an employers' operations due to a few extreme abuses. In a potential sign of things to come, the Governor vetoed a similar bill requires employers to pay employees for any rest period mandated by statute. Employers who regularly deny meal periods will surely experience a judicial response, whether it be a civil class action or regulatory prosecution. Employers who want to be fair and respect employees' requests may find themselves on the receiving end of costly litigation as the Labor Code’s unforgiving nature is again exposed. Employees who need a break may finally get one while those who want to skip the meal break will have to hope that the common sense of the Courts can work out a reasonable balance.

Employees who feel they have been denied meal and rest breaks or been subject to other unlawful conduct may request a questionnaire to explore whether there is a potentially valid claim at www.worklaw.cc/questionaire.php

Employers who want to remain in complaince with the often elusive California Labor Code requirements may contact Quintilone & Associates for a Wage and Hour Consultation by writing Richard E. Quintilone II, Esq. at req@worklaw.cc.