High court ruling on wage case seen as anti-business: workers can now sue for three years of missed break time.

WHILE the ramifications aren't fully clear the California Supreme Court's ruling in a recent wage and hour case is a significant setback for business.

As part of its unanimous decision in Murphy vs. Kenneth Cole Productions, the court ruled that employees can sue their companies for up to three years of lost wages in meal and rest period cases; previously no standard existed but many courts limited wage awards to one year.

"It clarifies a big argument between employers and employees," said John Quisenberry of the Quisenberry Law Firm, which specializes in wage and hour cases. "The decision triples the amount of damages compared to what the employers were insisting was the rule."

Institution-side lawyers were less than pleased with the ruling.

"It's an anti-business, anti-employer decision," said Labor Attorney Robert Naeve of Morrison & Foerster LLP. "If we needed another way to make it difficult to conduct business in California, the Supreme Court just provided it."

Employers are required to give employees a 30-minute break after five hours worked, and more breaks as the shift wears on. California Labor Code section 512 and California's Industrial Welfare Commission require employers to provide meal and rest periods during the workday. Labor Code section 226.7 requires employers to pay one additional hour to employees who have not taken these meal or rest periods.

The Supreme Court case hinged on whether the time in question constituted a wage for the worker, or a penalty for the employer, in addition to how far back employees could sue their employers for lost time.

Following the court's decision, if disputed time is determined to be a wage, employees can sue their bosses for up to three years of back pay. If the court determines the time is a penalty for the employer, the statute of limitation will be one year.

"The Supreme Court's decision recognizes the state's strong public policy in favor of hard-working employees," Quisenberry said. "The Court was unanimous, as it also was in its earlier decision (involving Say-on drugstores) that upheld workers' rights to pursue a class action against their employer to recover unpaid overtime wages. Together, these two decisions tell employers to bring their labor practices in line with the laws or suffer the economic consequences."

Quisenberry said this decision was unlikely to increase the volume of cases filed, because there's already at least one filed every day in California.

"I have a hard time imagining there being any more than this," he said.

Morrison & Foerster advised that in light of the decision, employers should post applicable wage orders in the workplace, consider preparing written policies relating to rest periods, train supervisors to enforce them, maintain records of these breaks, and consider voluntarily paying workers who haven't taken breaks.