Most Silicon Valley Middle Market company employers know that the California Labor Code and the Wage Orders generally require an employer to provide certain meal periods and rest breaks to non-exempt employees during their work day and that failure to do so results in a penalty equal to an additional one hour of pay for each violation.  According to California law, an employee must be relieved of all duties during their meal period and their rest breaks and this must include the ability to leave the employer’s premises.

In a recent decision involving Taco Bell’s discounted meal policy, through which it provided discounted food and drinks for any employee who worked a shift of at least two hours under the condition the employee not leave the premises during the break, the California Supreme Court rejected the employees’ arguments that the requirement they remain on premises if they purchased discounted food or drink meant that they were not relieved of all duties. The employees further argued that they were entitled to compensation for that time and that Taco Bell should incur penalties for missed meal periods and rest breaks.  However, the Court decided that the discounted meal policy was purely voluntary and therefore an employee could choose not to purchase a discounted meal and leave the Taco Bell premises for their meal period or rest breaks.

The Taco Bell case ended well for the employer and serves as a reminder of the value of a well-drafted meal period and rest break policy. Best practices for meal periods and rest breaks require at least the following:

  • A stand-alone meal period and rest break policy that spells out the meal periods and rest breaks that will be provided by the employer
  • A reporting mechanism that allows for an employee to report if they are forced to miss a meal period or rest break by their supervisor or by the press of work
  • Distribution of the policy on an annual basis with written acknowledgement from each non-exempt employee
  • Spot review of time cards to check for non-compliance and take corrective action

Compliance with the requirements of the Labor Code and Wage Orders is one of the most tedious tasks employers face. However, because the penalties and potential damages for simple violations are so steep, it is well worth an employer’s time to ensure that their policies and practices are fully compliant and provide the best defense possible to any challenges.

For a fuller explanation of the consequences of this recent decision, please click here for the complete Hopkins & Carley client alert.