The California Labor Code requires employers to furnish non-exempt employees meal periods and rest periods. Those employers who fail to do so must pay a "premium" consisting of one hour's pay to each affected employee for each day during which a violation occurs. The availability of these payments (mandated by changes in the law which took effect in 2000) has spawned a multitude of lawsuits in California by employees seeking recovery of the "premiums" on a class-wide or individual basis. However, until the California Supreme Court's recent decision in Murphy v. Kenneth Cole Productions, employers could not be certain whether their potential liability for premium payments stretched back a single year (under the theory that the payments are "penalties," subject to a one-year statute of limitations), or three years (under the view that the payments are "wages," subject to a longer limitations period).

In Murphy, the California Supreme Court determined that the premium payments mandated by the Labor Code are in the nature of wage payments, and that claims seeking recovery of these premiums are thus subject to a three-year statute of limitations. The immediate impact of Murphy will be to significantly increase the stakes in meal and rest period litigation, which already occupies a favored position among plaintiff's employment lawyers in the state. The decision thus reinforces the need for employers to carefully assess their policies and practices relative to meal and rest periods, and to take proactive steps to ensure the exacting requirements of California law are fully met. In order to avoid costly penalties, employees should be compelled to take required meal periods within the prescribed time limits, and should be paid the required premiums when they do not.

The members of Schiff Hardin's Labor and Employment Group who are licensed in California are experienced in the full range of wage and hour and other issues confronting California employers and are available to answer any questions you might have regarding California requirements.