MAPC Publishes “Los Angeles Court of Appeals Finds that Meal and Rest Period Penalties Are Cumulative Per Each Day of Violation”

The Second District of the California Court of Appeals (Los Angeles) found that UPS could be liable to each employee for per-day penalties for multiple violations of the meal and rest period provisions of the Labor Code, blunting UPS’ argument that it could only be liable for one violation per day.  Thus, in United Parcel Service, Inc. v. Superior Court (Allen), the Court of Appeal found that UPS could potentially be liable for up to two one-hour penalties per day if workers were not afforded both a meal period and one or more of the required rest breaks in a given work day.

UPS’ argument at the trial court sought to mitigate the potential damages it might owe to thousands of its workers under 32 consolidated wage-and-hour lawsuits.  Under Section 226.7 of California’s Labor Code, an employer who fails to reasonably provide for a 30-minute meal period and two 10-minute rest breaks in a typical 8-hour day can be liable for a penalty of one hour of pay per violation.  UPS argued that the Legislature intended that such penalty could be a maximum of one hour’s pay per each day of violation regardless of whether the failure in a given day involved the failure to provide multiple rest breaks and meal periods within that day.  The trial court rejected UPS’ argument, and the Court of Appeal agreed with the trial court’s interpretation.

The Court of Appeal found that the Legislature had recognized meal periods and rest breaks as two separate bases for statutory liability under Section 226.7.  Thus, the court read the statutory language that a penalty of up to one hour per day could be recovered by the employee for each violation should be read disjunctively, i.e., a penalty could accrue for a violation of the meal period requirement or for a violation of the rest break requirement.  The court found that this language provided a separate basis for charging a penalty for each type of violation that occurred in a given day, up to a maximum of two penalties.

For UPS, the impact of the ruling is great, given the large number of litigating employees the ruling with affect.  Take one hour of average pay for a UPS employee, multiply it by three to four years worth of full time employment, and multiply that number by tens of thousands of employees.  For employers who face more discrete claims involving one employee or several employees, the additional potential liability of two hours’ penalty instead of one hours’ penalty for daily rest period violations will not have near as much impact on the employer, and liability will still be highly fact driven as to that employer.  Unlike the facts of the UPS case, many wage-and-hour claims that allege violations of the meal period and rest break requirements lack facts tending to show the employer consistently failed to reasonably provide both a meal period and rest breaks during the work day.  Further, in those circumstances where an employer’s practices are so grossly violative of the Labor Code that an employee can legitimately raise facts supporting two penalties per day, the employer’s given liability for other violations of the Labor Code will present damages liability that will eclipse the relatively small additional liability stemming from the penalty of one additional hour of pay per day.

United Parcel Service, Inc. v. Superior Court (Allen) (2d. Dist. 2011) 196 Cal.App.4th 57.