An Employer's Failure to Affirmatively Authorize Meal and Rest Breaks Is Grounds for Class Certification -- Benton v. Telecom Network Specialists, Inc.

Benton v. Telecom Network Specialists reversed the trial court's decision not to certify a class of employees for purposes of determining whether they had been denied meal and rest breaks.  In doing so, the decision also clarifies the affirmative nature of an employer's legal obligation to provide off-duty breaks. 

Last year's Supreme Court decision in Brinker explained that an employer cannot avoid liability merely by establishing that it has not actively prohibited or prevented breaks.  To the contrary, employers have a legal duty under the Labor Code to affirmatively publish and implement internal policies that expressly authorize and permit employees to take compliant off-duty meal and rest breaks.  An employer who fails to discharge this affirmative duty may be liable. 

Benton continues the recent trend of appellate court decisions (including Bradley v. Networkers Int'l), which have instructed trial courts to follow this aspect of Brinker when evaluating a motion for class certification.  The putative class of security guards in Benton claimed that they could establish class-wide liability based on their employer's lack of a compliant policy.

[T]he plaintiffs' “theory of legal liability” is that TNS violated wage and hour requirements by failing to adopt a policy authorizing and permitting its technicians to take meal or rest break periods. In plaintiffs' view, TNS was obligated to implement procedures ensuring that technicians received notice of their meal and rest period rights and were permitted to exercise those rights. For the purposes of class certification, the question is whether this theory of recovery can be “proved (or disproved) through common facts and law.”

In response, the employer argued that it could avoid liability by establishing that individual employees might nevertheless have had "opportunities" to take compliant breaks when they were not busy even if no company policy specifically authorized them to do so.  The lower court bought this argument, finding that an assessment of the scope of these "opportunities" for each employee would prevent class certification. The appellate court in Benton held that this was error. 

Rather than focusing on whether plaintiffs' theory of liability—that TNS violated wage and hour requirements by failing to adopt a meal and rest period policy—was susceptible to common proof, the court improperly focused on whether individualized inquiry would be required to determine which technicians had missed their meal and rest periods. The written order (as well as statements made at the motion hearing) make clear that the trial court did not believe TNS would be liable upon a determination that its lack of a meal and rest policy violated applicable wage and hour requirements; rather, it concluded that TNS would become liable only upon a showing that a technician had missed breaks as a result of TNS's policies.

[H]owever, Brinker “expressly rejected” this mode of analysis. As succinctly stated in Faulkinbury [v. Superior Court]: “the employer's liability arises by adopting a uniform policy that violates the wage and hour laws. Whether or not the employee was able to take the required break goes to damages, and ‘[t]he fact that individual [employees] may have different damages does not require denial of the class certification motion.'"

Benton therefore reinforces the message that class certification will normally be proper where the predominant issue is the legal sufficiency of the employer's meal and rest break policies, or the lack thereof.     

 

California Minimum Wage Increase has Ripple Effect on Other Laws

Under recently signed legislation (AB 10) the minimum wage in California will increase on July 1, 2014 from $8.00 to $9.00 per hour; and will increase again on January 1, 2016 to $10.00 per hour.

The unusual mid-year implementation of the 2014 increase may catch some businesses by surprise, so employers should mark their calendars and make plans to implement the change. Also, anytime the base minimum wage increases it necessarily has a ripple-effect on other compensation thresholds.  For example:

  • The minimum salary necessary to avoid overtime payments to exempt "white collar" managerial, administrative and professional employees is pegged at twice the minimum wage rate for a 40-hour workweek.  This weekly salary threshold will thus rise to $720 on July 1, 2014, and $800 on January 1, 2016.
  • The "regular rate of pay" for exempt commissioned salespeople is pegged at 1.5 times the minimum wage and will thus increase in 2014 and 2016 to $13.50 and $15.00, respectively. 
  • Unlike federal law, California's minimum wage rate must be separately paid for "each hour worked" rather than as the average of the compensation for all hours worked in a week.  As a result, "piece rate" or performance-based compensation systems must ensure that each category of employee work time is generating sufficient compensation to comply with the new standards.

Under the new rates, California's minimum wage rates will be the highest in the nation.   But stay posted, a high-profile movement is under way to push for a base minimum wage rate of $15.00.