Proskauer Hails California Wage Ruling as “Rare Victory” For Employers

The California Supreme Court has ruled in favor of employers in a case involving missed-break meal premiums on wage statements. Proskauer Rose LLP attorneys are hailing the California wage ruling as a “rare victory” for companies in the state.

In Naranjo v. Spectrum Sec. Servs., Inc., the court held that, under some circumstances, an employer will not be penalized under California Labor Code Section 226 for failing to report missed-break meal premiums on employees’ wage statements.

Proskauer Rose LLP attorneys Tony Oncidi, Jonathan Slowik and David Gobel wrote about the context of the case. About a year ago, the same court ruled that failure to pay premium payments for meal and rest period violations does bring derivative penalties for inaccurate wage statements. But in this May 6 decision on the missed-break meal premiums, the Court gave employers a potential out from these penalties, which can be up to $4,000 per employee.

A key provision in the statute says that the penalty will be imposed only when there is “knowing and intentional failure” to comply with the wage statement law. The employer in Naranjo v. Spectrum Sec. Servs., Inc. argued that even if it had an obligation to report the premium pay, its failure to do so was not “knowing and intentional” under Section 226.

The Proskauer attorneys note that the root question in this matter— whether the premium had to be paid at all — was not settled until 2022. Thus the Court could plausibly hold that, given the uncertainty and confusion, it was not “objectively unreasonable” for the employer to believe it had no obligation to report the premium pay as wages.

Read past Today’s General Counsel coverage of lawsuits involving employees here and here.