California Supreme Court Rules that Meal and Rest Period Premium Pay Must Include All Forms of Nondiscretionary Compensation

In a significant victory for California workers, the California Supreme Court ruled on July 15, 2021, in Ferra v. Loews Hollywood Hotel, LLC, that the premium pay owed to an employee who does not receive a legally compliant meal or rest period is calculated by incorporating all forms of nondiscretionary compensation owed to the employee.

Labor Code Section 226.7(c) states that the premium pay is one hour of pay at the employee’s “regular rate of compensation.” Reversing the Court of Appeal, the Supreme Court ruled that this language is interpreted identically to the term “regular rate” in federal and state overtime law. In overtime law, the “regular rate” is a calculation that incorporates all forms of nondiscretionary compensation, including, for example, hourly wage rates, commissions, shift differentials, piece rate pay, and nondiscretionary bonuses. The Supreme Court rejected the employer’s argument that “regular rate of compensation” means only the employee’s base hourly wage rate. 

Michael Rubin and Eileen Goldsmith of Altshuler Berzon LLP filed an amicus brief in the Supreme Court on behalf of the California Employment Lawyers Association, supporting the employee plaintiffs. Ms. Goldsmith participated in the Supreme Court oral argument. 

You can read the decision here.