Meal Break Costs are Rising

“If my hourly employees miss their meal break, why do I have to pay them an hour instead of the half-hour they would have taken?”

Your HR Survival Tip

California requires companies to pay a premium when non-exempt (hourly) employees either miss a meal break, take it late, or don’t take the mandatory 30 minutes. Regardless of how long the meal break is normally, the premium is always based on an hour.

The premium used to be one hour of their base hourly rate but a recent California Supreme Court decision has added to that rate, based on definitions. There are legal definitions and differences in California of an employee’s “regular” rate of pay versus their “hourly” rate. Many companies use those terms interchangeably but shouldn’t because they are often different amounts.

The hourly rate of pay is what you’ve agreed to pay an employee to work for you. The employee may even have more than one rate, due to different types of work. Even so, it’s a flat amount you have agreed upon for hours worked.

The regular rate of pay is a calculation. Whenever you see “regular” used, understand it is not a flat amount because it includes other types of pay an employee may receive.

Calculating the regular rate used for this premium is a matter of finding the weighted average of that employee’s pay over a period of time. Included in the regular rate calculations are the base hourly earnings, commissions, production bonuses, piece work earnings, per diem reimbursements, and any non-discretionary bonuses. When doing the math, it’s just as important to understand what is not included, such as paid time off, reporting time, expense reimbursements, overtime premiums, and discretionary bonuses.

You may find calculating the regular rate takes a bit of time at first as you determine what forms of pay your employees might receive. However, it is a good skill to master now that it must be used for the meal break premium. Make sure premium payments are combined on a separate line on the wage statement (pay stub) so you have proof of payment. Since this court decision will allow employees to make a claim for your past mistakes and miscalculations, it’s definitely time to review and correct or update your pay practices.

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