Federal Service Contractors are Not Exempt from California Labor Code -- Naranjo v. Spectrum Security Services, Inc.

Employers who provide services under contract to the federal government are required to pay minimum wages and benefits set by the Department of Labor pursuant to the McNamara-O'Hara Service Contract Act of 1965 (the "SCA") (41 U.S.C. § 351 et seq.).   In Naranjo v. Spectrum Security Services, Inc. the Second District Court of Appeal held that being subject to the SCA  confers no exemption from the California Labor Code -- in other words, employers must comply with whichever regulatory scheme is the most favorable to the worker on any given issue. 

The opinion includes a useful explanation of how general preemption principles apply to the California Labor Code, especially the requirement to pay compensation for missed meal breaks.      

As our Supreme Court has explained, the additional compensation identified in subdivision (b) of this provision is not a penalty, but a form of “premium wage” paid to employees to compensate them for an adverse condition they have encountered during their work hours, namely, the potential hazard to their health and welfare from the denial of rest and meal breaks. ( Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal .4th 1094, 1102-1111.) As such, the additional compensation is akin to overtime pay, which is another form of premium pay. (Id. at pp. 1109-1110.)

Thus, according to the Court, the purpose of California' s meal period legislation is in no way inconsistent with the goal of the SCA, which is  "to secure for employees minimum wages and benefits determined by the Secretary of Labor."

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