Nearly seven months since the California Consumer Privacy Act (CCPA) went into effect, the Attorney General’s enforcement period is set to begin on July 1, 2020.  Is your business in compliance with the CCPA and prepared to respond to consumer requests under the new law and regulations?  

In Betancourt v. OS Restaurant Services, LLC (Cal. Ct. App., Apr. 30, 2020, No. B293625) 2020 WL 2570839, reh'g denied (May 18, 2020), the California Court of Appeal, Second Appellate District ruled an action for failure to provide meal or rest breaks under Labor Code § 226.7 is not an action for nonpayment of wages, as defined in Labor Code § 218.5, therefore attorney’s fees are not recoverable.

The Second Appellate District reversed an award of attorney’s fees related to an action for failure to provide meal and rest breaks, under Labor Code § 218.5. Raquel Betancourt sued her former employer claiming retaliation, wrongful termination, unpaid premium wages for rest break violations under Labor Code § 226.7, and derivative claims for inaccurate wages statements (Labor Code § 226) for failing to list and include the rest break premiums, as well as waiting time penalties (Labor Code §§ 201 through 203) for failing to pay all wages at the time of her termination, including the unpaid rest period premiums. Betancourt’s prayer for relief included requesting attorney’s fees under Labor Code §§ 218.5 and 226.

The parties settled the case before trial. The claims settled, as stated on the record in court, were for failure to provide meal and rest breaks, accurate itemized wage statements, and for waiting time penalties as well as all other wage and hour claims that were or could have been alleged. Plaintiff dismissed her retaliation and wrongful termination claims with prejudice and without payment. The parties disagreed as to attorney’s fees, so they agreed plaintiff could file a motion for attorney’s fees later. Plaintiff filed a motion for attorney’s fees requesting $580,794 in fees based on Labor Code §§ 218.5 and 226.

The Courts of Appeal’s analysis focused on the Labor Code’s “nonpayment of wages” language, and stated there was no basis for attorney’s fees in this case because the action was for meal and rest breaks, not nonpayment of wages. The Court based its decision on Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, 1255 (claims for failing to provide meal or rest breaks are not actions for nonpayment of wages), and its progeny—specifically Ling v. P.F. Chang’s China Bistro, Inc. (2016) 245 Cal.App.4th 1242, 1261 (Ling), and Naranjo v. Spectrum Security Services, Inc. (2019) 40 Cal.App.5th 444, 474, review granted & depublication denied, Jan. 2, 2020, S258966 (Naranjo).

The remedy for failing to provide a meal or rest break is measured by an employee’s regular hourly wage; however, simply because the remedy is measured by the hourly wage does not convert the remedy into a wage, as defined in the Labor Code section authorizing the recovery of waiting time penalties. (Ling, supra, 245 Cal.App.4th at p. 1261.) Additionally, failing to provide meal or rest breaks does not give rise to derivative claims for waiting time and wage statement penalties, under Labor Code sections 203 and 226, respectively. (Naranjo, supra, 40 Cal.App.5th at p. 474.) Because a plaintiff is not entitled to wage statement penalties under Labor Code § 226, they are not entitled to recovery of attorney’s fees under Labor Code § 226(e).

What it means to California Employers

Meal and rest break claims are popular among plaintiffs in California. As the Betancourt case shows, the requested attorney’s fees of $580,794 eclipsed the settlement amount of $15,375 for plaintiff’s meal and rest break claims. This ruling is significant for California employers facing wage and hour actions based solely on meal and/or rest break claims because the court clarified that attorney’s fees are not recoverable, which may help reduce the overall exposure and  the number of attorney’s–fee–driven wage and hour lawsuits.

For further information, contact the authors or your usual employment counsel at AALRR.

This AALRR presentation is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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