California Supreme Court
Regular Rate of Compensation Under Labor Code §226.7(c) is Identical to Regular Rate of Pay Under §510(a) and Encompasses All Nondiscretionary Payments, Not Just Hourly Wages.FERRA V. LOEWS HOLLYWOOD HOTEL
Labor Code section 226.7 references breaks and “regular rate of compensation,” while Section 510 references overtime and “regular rate of pay.” The Court held that these phrases are legally synonymous for purposes of calculating premium pay for missed meal or rest breaks. According to Labor Code section 226.7(c), “If an employer fails to provide an employee a meal or rest or recovery period…the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation.” The “regular rate of compensation” includes more than the hourly rate. It must also include any nondiscretionary payments. A payment is only discretionary where the employer has sole discretion to decide both: (a) whether a payment occurs, and (b) the amount of the payment. This calculation is identical to the “regular rate of pay” calculation for overtime pay under Section 510.
RETROACTIVE APPLICATION
The decision applies retroactively because there was no basis to depart from the default rule that a Court’s Opinion interpreting a statute applies retroactively. There could be no justifiable reliance on a contrary interpretation of the law because there was a split of authority regarding the issue.
Congratulations to CELA members Dennis F. Moss of Moss Bollinger. Thank you to Eileen Goldsmith and others for drafting CELA’s Amicus Curiae brief.
California Supreme Court. Filed 7/15/2021. 11 Cal.5th 858. Opinion by Justice Liu.
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