California Supreme Court Issues Ruling in Brinker Clarifying Employers Duty to Provide Meal and Rest Breaks to Hourly Employees

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1 APRIL 13, 2012 CALIFORNIA EMPLOYMENT & LABOR UPDATE California Supreme Court Issues Ruling in Brinker Clarifying Employers Duty to Provide Meal and Rest Breaks to Hourly Employees In one of the most anticipated wage and hour law decisions in years, the California Supreme Court unanimously ruled on April 12, 2012 that employers must relieve hourly employees of all duties during meal periods, but they are not required to police their employees to ensure no work is done. The Court also ruled that employees who work no more than 10 hours in a shift are entitled to one meal period, even if timing of the meal period causes the employee to work more than five hours between the meal and the end of the shift. Further, the Court clarified rules on rest periods and provided guidance to trial courts regarding their duty to make legal or factual determinations at the class certification stage. The case, Brinker Restaurant Group v. Superior Court (Cal. Sup. Ct. Case No. S166350) was filed in 2004 and largely focused on the proper definition of provide in Labor Code Sections and 512. The statutes require employers to provide an employee with meal and rest periods or pay the employee for an additional hour for each work day the meal or rest period is not provided. While employers generally took the position that provide meant to make available, attorneys for employees argued that provide really meant that employers had to ensure that employees not only were given the chance to take a break but that they actually took it. Prior to today s ruling, several Court of Appeal decisions construed provide to mean make available. One of the most recent was the Lamps Plus Overtime Cases (Cal. Ct. App. Docket No. B220954) in which the Court of Appeal affirmed the trial court s ruling that Lamps Plus only had to provide employees with the opportunity to take meal and rest breaks but not ensure that they actually took them. (Slip op at 10). (Lamps Plus was represented by Douglas R. Hart, Geoffrey D. DeBoskey and Beth A. Scheel of Sidley Austin, LLP). Below is a summary of the Brinker decision, followed by important lessons for employers. It is important to consult your employment lawyer for advice regarding any specific questions you might have about Brinker and its consequences for your particular business. This Sidley update has been prepared by Sidley Austin LLP for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers. Attorney Advertising - For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, and One South Dearborn, Chicago, IL 60603, Prior results do not guarantee a similar outcome.

2 Page 2 Case Summary Rest Periods Duration and Timing of Rest Periods As a restaurant chain, Brinker is subject to Wage Order 5 (Public Housekeeping Industry). The Wage Orders state in part that every employer shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period. It goes on to state that rest periods are based on the total daily hours worked and that employees should be given 10 minutes rest for every four hours worked, or major fraction thereof. Employees who work less than 3½ hours in a day are not entitled to rest periods. The Court stated that major fraction of four hours is anything more than two hours. However, the express language of the wage order excluding employees who work 3½ hours means that no rest period is required for employees who work at least 2 but less than 3½ hours in a shift. Rest periods, therefore, should be calculated as follows: Less than 3½ hours: No rest period 3½ to 6 hours: 10 minutes More than 6 to 10 hours: 20 minutes More than 10 to 14 hours: 30 minutes, and so on. As to the timing of the rest periods, the court held that, while employers must make a good-faith effort to authorize and permit rest breaks in the middle of each work period, they may deviate if practical considerations render it infeasible. The Court declined, however, to explain what situations might constitute such practical considerations. Certification of a Rest Period Subclass The question for class certification in Brinker was whether any theory of recovery advanced by Plaintiffs were likely to prove amenable to class treatment. One such theory was that Brinker s uniform corporate rest break policy violated the wage order because it did not account for the major fraction language. Under the policy, employees received one 10-minute rest break for every four hours worked but not for any major fraction thereof. The policy said, If I work over 3.5 hours during my shift, I understand that I am eligible for one ten minute rest break for each four hours that I work. The Court said that claims regarding a uniform policy that violates the wage and hour laws is consistently applied to a group of employees are properly and routinely found suitable for class treatment. The Court rejected the Court of Appeal s conclusion that, because rest breaks can be waived, such an inquiry requires individualized proof for plaintiffs to be able to show that the rest breaks were denied by the employer, and had not simply been waived by the employees. The Court said Brinker s policy on its face did not authorize the proper number of breaks and employees cannot waive a break that has not been authorized. Accordingly, the court found the Rest Break Subclass could be certified. Meal Periods Employer Duty to Provide Meal Periods The key question to be resolved in Brinker was whether an employee s duty to provide meal periods under Labor Code Sections and 512 meant that an employer must (a) make the meal period available to the employee by

3 Page 3 seeing that he/she was able to be relieved of all work for 30 minutes or (b) ensure that employees actually take an uninterrupted 30 minute meal break and do not choose to take a break of less than 30 minutes, or no break at all. The Court adopted the make available standard set forth by Brinker and adopted by the Court of Appeal, stating, We conclude that an employer must relieve the employee of all duty for the designated period, but need not ensure that the employee does no work. (Slip op. at 27). It is important to note that the Court s ruling does not preclude the use of on-duty meal period agreements, subject to the requirements of the wage order. But absent those circumstances, an employer s obligation is to provide an off duty meal period: an uninterrupted 30-minute period during which the employee is relieved of all duty. (Slip op. at 28). The Court rejected plaintiffs argument that the enforce standard is the proper one because it lacked any textual basis in the wage order or statute. Although the wage orders at one time contained language clearly assigning employers a duty to prevent employees from working during meal periods, no order in the last 50 years has contained such an obligation. Indeed, the Court said the fundamental point of a meal break is for the employer to relinquish any employer control over the employee and how he or she spends the time. (Slip op. at 33) In other words, if an employee wants to spend his or her time doing work during a break, forcing him or her to stop requires the employer to interfere with the employee s choice. Also noteworthy is the Court s statement that [p]roof an employer had knowledge of employees working through meal periods will not alone subject the employer to liability for premium pay; employees cannot manipulate the flexibility granted them by employers to use their breaks as they see fit to generate such liability (Slip op. at 36). This language prohibits employees from choosing to work during their provided meal periods, then claiming missed meal premiums because they did work instead of taking an uninterrupted 30-minute meal period. The Court expressly stated that the employer is not obligated to police meal breaks and ensure no work thereafter is performed. (Slip op. 36) In summarizing its ruling on the issue, the Court said, An employer s duty with respect to meal breaks under both section 512, subdivision (a) and Wage Order No. 5 is an obligation to provide a meal period to its employees. The employer satisfies the obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so. (Slip op. 36). Employer Duty to Provide Meal Periods (i.e. the Rolling Five question) The question before the Court was whether an employee who is scheduled by the company to take lunch before the third hour of an 8-hour shift (aka early lunching ) is entitled to a second meal period because the remaining work day after the meal period would last five hours. The Court answered no. There is no requirement that employees who work no more than 10 hours be given a second meal period, even though that may result in them working for five hours or more at a time without a meal break. Rather, absent waiver, [Labor Code] section 512 requires a first meal period no later than the end of an employee s fifth hour of work, and a second meal period no later than the end of an employee s 10 th hour of work. (Slip op. at 37). Waivers are still available to employees who work six hours or less and wish to waive their meal period, and employees who work 12 hours or less and wish to waive the second meal period as long as the first was not waived. Certification of the Meal Period Subclass The Court remanded the issue of certification of the meal period subclass because the class was certified based on the erroneous assumption by the trial court that the Labor Code and wage order did require a meal period for every fivehour work period. The court remanded the issue and directed the trial court to consider certification of the meal period subclass in light of the clarified standard.

4 Page 4 Certification of Off-the-Clock Claims Plaintiffs off-the-clock claims arose from their meal period claims. They claim Brinker required employees to clock out for meal periods but continue to perform work. The Court affirmed the Court of Appeal decision to overturn class certification on this issue. It held that there was no common policy or common method of proof by which Plaintiffs could prove their claim on a class-wide bases. In addition, the fact that employees clocked out for meal periods creates a presumption they are doing no work, a presumption plaintiffs were unable to rebut. The Court went on to state, On a record such as this, where no substantial evidence points to a uniform, companywide policy, proof of offthe-clock liability would have had to continue in an employee-by-employee fashion, demonstrating who worked off the clock, how long they worked, and whether Brinker knew or should have known of their work. (Slip op. at 43) Class Certification The Court stated that to the extent the propriety of certification depends on disputed threshold legal or factual questions, a court may, and indeed must resolve them. (Slip op. at 13) The Court emphasized that the trial court must resolve at the certification stage, any legal issues that constitute an element necessary to certification, i.e. predominance. However, it is not an automatically reversible error if the trial court fails to resolve other disputed legal issues affecting the elements of a claim. In other words, the trial court is required only to resolve legal or factual issues that are necessary to the determination of class certification. Key Lessons for Employers Meal Periods: The employer s duty is to make available to all employees who work at least five hours (absent waiver from employees whose shift is six hours or less) a 30-minute, uninterrupted meal period before the end of the fifth hour of the shift. This means employers must relieve the employee of all job duties during that time. Employees may choose to do whatever they want during those 30 minutes, free from the employer s control. Employers are not required to ensure that employees take the full 30 minutes provided to them and do not do any work during the meal break. Employers may not pressure or discourage employees from taking an uninterrupted 30-minute meal break. Employees who work no more than 10 hours in a shift are entitled to one meal break. The statute does not provide for one meal period for every five hours of work; it is therefore permissible, for example, for an employee to work two hours before lunch and six hours afterward. Rest Periods Employees who work less than 3½ hours in a shift need not be provided with rest breaks. Employees are entitled to one 10-minute rest period for each four hours worked or major fraction thereof. In other words, employees who work 3½-6 hours get 10 minutes rest, more than 6-10 hours get 20 minutes rest, more than 10 hours-14 hours get 30 minutes rest, etc. The employer must make a good-faith effort to provide the rest periods in the middle of each work period. However, practical considerations may call for breaks to be taken at other times. The Court specifically declined to say what such practical considerations might be.

5 Page 5 If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work. The Employment and Labor Practice of Sidley Austin LLP Our Employment and Labor Practice has decades of experience in litigating virtually all types of employment and traditional labor claims before federal and state courts and agencies, ranging from single-plaintiff cases to complex class actions. We also provide comprehensive counseling to our clients on a wide variety of employment and labor issues. To receive future copies of this and other Sidley updates via , please sign up at BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG HOUSTON LONDON LOS ANGELES NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C. Sidley Austin LLP, a Delaware limited liability partnership which operates at the firm s offices other than Chicago, New York, Los Angeles, San Francisco, Palo Alto, Dallas, London, Hong Kong, Houston, Singapore and Sydney, is affiliated with other partnerships, including Sidley Austin LLP, an Illinois limited liability partnership (Chicago); Sidley Austin (NY) LLP, a Delaware limited liability partnership (New York); Sidley Austin (CA) LLP, a Delaware limited liability partnership (Los Angeles, San Francisco, Palo Alto); Sidley Austin (TX) LLP, a Delaware limited liability partnership (Dallas, Houston); Sidley Austin LLP, a separate Delaware limited liability partnership (London); Sidley Austin LLP, a separate Delaware limited liability partnership (Singapore); Sidley Austin, a New York general partnership (Hong Kong); Sidley Austin, a Delaware general partnership of registered foreign lawyers restricted to practicing foreign law (Sydney); and Sidley Austin Nishikawa Foreign Law Joint Enterprise (Tokyo). The affiliated partnerships are referred to herein collectively as Sidley Austin, Sidley, or the firm.

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