This morning, the California Supreme Court issued
its long-awaited decision in Brinker Restaurant Corp. v. Superior Court
, No. D049331 (April 12, 2012). This decision finally brings some level of clarity – though perhaps not as much as had been hoped – to California’s hotly litigated requirements regarding meal periods and rest breaks for non-exempt employees. The Court held that: (i) the meal period standard obligates employers to “relinquish control over” employees’ “activities and permit them a reasonable opportunity to take an uninterrupted 30-minute break,” but does not obligate the employer to ensure that no work is done; (ii) no “rolling five” requirement exists with regard to meal period timing; (iii) a shift over two hours long constitutes a “major fraction” of a four hour shift in the context of rest breaks; and (iv) it is inappropriate to certify a class of off-the-clock work claims in the face of an express policy forbidding off-the-clock work, at least in the absence of “substantial evidence” contravening the express policy. The Court did not, however, issue an outright ruling on whether the meal period claims could be certified, electing instead to remand that issue to the trial court. Background
On October 22, 2008, the California Supreme Court granted a petition for review of Brinker Restaurant Corp. v. Superior Court (Hornbaum)
. This class action suit was brought by restaurant employees alleging that they were denied rest periods, denied meal periods, and required to work off the clock during meal periods. The trial court certified the class without deciding the issue of how the meal period and rest breaks requirements would be applied to the employees’ claims.
The Court of Appeal issued a peremptory writ of mandate directing the trial court to vacate its certification order and to enter a new order denying with prejudice certification of the rest break, meal period, and off-the-clock subclasses. The Court of Appeal held that the trial court erred by failing to determine the threshold issue of how the applicable law would be interpreted and applied, concluding that such a determination was necessary to a finding of whether individual or common issues predominated in the case. Reaching the issue itself, the Court of Appeal held that employers need only provide
employees with an opportunity to take meal periods and rest breaks and do not need to take affirmative steps to ensure
that meal periods and rest breaks were actually taken. The Court also held that the claims therefore were not amenable to class treatment because liability under this standard could only be established through individual inquiries. Whether employees were denied the rest breaks and meal periods or voluntarily chose not to take them was a highly individualized inquiry, as was the question of whether any employees were forced to work off the clock. For that reason, the Court of Appeal’s decision, recognized both (i) the right of employees to decide for themselves whether or not to avail themselves of meal periods and rest breaks and (ii) the practical impossibility of making such determinations on a class basis.
The California Supreme Court granted review, and since then practitioners and commentators have been waiting for guidance on a key question: is an employer’s duty simply to make meal periods available to non-exempt employees, allowing employees to forego them if they choose? Or, must employers actually ensure that meal periods are taken, effectively forcing non-exempt workers to take meal periods and rest breaks? The Court also accepted post-argument briefing concerning the so-called “rolling five” issue, which addresses whether meal periods must be provided to an employee for every
five consecutive hours of work. For example, if an employee is scheduled to work a nine-hour shift and takes a meal period after the first three hours of work, must the employer provide a second meal period after the employee works an additional five hours?
Since the Supreme Court granted review of Brinker
in 2008 and heard oral arguments on November 8, 2011, California employers have been awaiting clarity on the California regulations regarding meal periods and rest breaks for workers. In fact, no less than six other cases have been placed on “grant and hold” status pending the decision in Brinker
. See Brinkley v. Public Storage
, 198 P.3d 1087 (Jan. 14, 2009); Bradley v. Networkers International LLC
, 2009 Cal. LEXIS 51316 (May 22, 2009); Faulkinbury v. Boyd & Associates
, Inc., 240 P.3d 1215 (Oct. 13, 2010); Brookler v. Radioshack Corporation
, 2010 Cal. LEXIS 11817 (Nov. 17, 2010); Chipotle v. Mexican Grill, Inc.
, 246 P.3d 612 (Jan. 26, 2011); Tien v. Tenet HealthCare Corp
., 251 P.3d 941 (May 18, 2011). The Decision
As an initial matter, the Court started with a discussion of the propriety of considering the merits of a case at the class certification stage. Consistent with prior precedent, the Court held that although “resolution
of disputes over the merits of a case generally must be postponed until after class certification,” nonetheless “[t]o the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must
, resolve them.” (Slip Op. at 11, 13 (emphasis added).) See also Linder v. Thrifty Oil Co.
, 23 Cal. 4th 429, 443 (2000); Wal-Mart Stores, Inc. v. Dukes
, 131 S. Ct. 2541, 2551 (2011). The Court then turned to the parties’ substantive legal disputes and the elements of the claims at issue in order to examine the propriety of the Court of Appeal’s reversal of class certification. Meal Periods
The Court began by addressing the nature of an employer’s duty to provide non-exempt employees with meal periods. In an employer-friendly holding, the Court agreed with the Court of Appeal, concluding that:
An employer’s duty with respect to meal breaks under both section 512, subdivision (a) and Wage Order No. 5 is an obligation to provide a meal period to its employees. The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so. . . . On the other hand, the employer is not obligated to police meal breaks and ensure no work thereafter is performed. Bona fide relief from duty and the relinquishing of control satisfies the employer’s obligations, and work by a relieved employee during a meal break does not thereby place the employer in violation of its obligations and create liability for premium pay under Wage Order No. 5, subdivision 11(B) and Labor Code section 226.7, subdivision (b). (Slip Op. at 36-37.)
The Court’s language does appear to leave some room for Plaintiffs’ counsel to argue – as they did at oral argument – that notwithstanding an employer’s uniform and compliant meal period policy, liability may still be found if the employer failed to provide a “reasonable opportunity” for employees to take a meal break. In the absence of an express uniform policy or evidence of a corporate-wide practice, however, such liability should be difficult, if not impossible, to determine on a class-wide basis because individual facts must be presented to determine whether a particular employer discouraged a particular employee to forego a particular meal period. Indeed, the Court recognized that “employees cannot manipulate the flexibility granted them by their employers to use their breaks as they see fit to generate […] liability” for premium pay. (Slip Op. at 36.)
Next, the Court considered the so-called “rolling five” issue – whether employers are required to provide a meal period after no more than five hours of work in a day, absent waiver, or simply to provide a meal period at any point in a scheduled shift that exceed five hours. After finding the statutory text of Section 512 “conclusive” on this issue from a statutory perspective, the Court engaged in a lengthy historical analysis of the IWC wage orders and concluded that the majority of the wage orders, including Wage Order Nos. 4 and 5 were drafted to mirror the language of Section 512 and, on that basis, rejected the idea of the “rolling five”:
Thus, as to the majority of its 2001 wage orders, the IWC did not intend to impose a different meal period requirement than that spelled out in section 512; specifically, it did not intend to require employers to provide employees a second meal period no more than five hours after a first meal period. These orders and the statute are congruent, under each, a first meal period is guaranteed after five hours of work, while a second meal period is required only after 10 hours of work. (Slip Op. at 45.)
The Court went on to hold that although Wage Orders 4 and 5 contain slightly different language than the majority of the 2001 wage orders, this difference “was for reasons related to meal period waivers, not meal timing,” and did not require a different result. (Slip. Op. at 45-46.)
The Court did not, however, decide the ultimate issue of whether a meal period claim could be properly certified in this case. Instead, after considering the threshold questions, the Court held that “the class definition adopted by the trial court is overinclusive” and that it would be “the prudent course to remand the question of meal subclass certification to the trial court for reconsideration in light of the clarification of the law we have provided.” (Slip. Op. at 51.) In doing so, it declined to articulate a general rule that its substantive interpretation of the meal period standard was not amenable to class certification as a matter of law.
The Court also addressed the frequency with which rest time must be authorized and permitted. IWC Wage Order No. 5 states that employees must be provided with ten minutes of rest for each four hours of work “or major fraction thereof.” Although the wage order does not define “major fraction,” the Court looked to the legal, mathematical, and linguistic understanding of “major fraction” to conclude that it “mean[s] a fraction greater than one-half.” (Slip Op. at 18.) According to the Court, it therefore follows that employees’ rest time is calculated by dividing the number of hours worked by four, “rounded down if the fractional part is half or less than half and up if it is more (a ‘major fraction’), times ten minutes.” (Slip Op. at 19.) Taking into consideration the wage order’s provision that a rest break need not be authorized unless an employee works a shift of at least three and one-half hours, the Court concluded that “[e]mployees are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.”(Slip Op. at 20.)
The Court next addressed a related question regarding rest break timing, holding that California law does not require employers to permit their employees a rest break before any meal period. Employers are simply “subject to a duty to make a good faith effort to authorize and permit rest breaks in the middle of each work period, but may deviate from that preferred course where practical considerations render it infeasible.” (Slip Op. at 22.)
Ultimately, in light of is interpretation of the rest break standard, the Court concluded that the trial court properly certified a rest break subclass. Brinker Restaurant Corp.’s formal policy indicated that employees would be “eligible for one ten minute rest break for each four hours” worked. (Slip Op. at 25.) The Court held that common questions therefore predominated because “Brinker adopted a uniform corporate rest policy that violates Wage Order No. 5 because it fails to give full effect to the ‘major fraction’ language.” (Slip Op. at 24.) This is consistent with the general principle that certification in a wage-and-hour class action is more likely if the express written policy in question is not compliant with the law.
The Court upheld the Court of Appeal’s ruling declining to certify the off-the-clock claims subclass. Brinker had an express policy that forbade off-the-clock work in accordance with California law. Further, there was no evidence “of a systematic company policy to pressure or require employees to work off the clock.” (Slip Op. at 52.) The Court therefore held that “[o]n a record such as this, where no substantial evidence points to a uniform, companywide policy, proof of off-the-clock liability would have had to continue in an employee-by-employee fashion” and certification was inappropriate. (Slip Op. at 53 (emphasis added).)
The Brinker decision has provided substantial clarity in an uncertain area and, in the main, should be a potent tool for defendant employers. The Court reiterated the importance of the courts’ obligation to consider the merits to the extent necessary to apply the certification analysis, emphasized the individualized nature of off-the-clock claims, rejected the “rolling five” argument, and held employers do not have an obligation to ensure that no work is done during a meal period. It would be prudent for employers to review their policies and procedures in the context of the Brinker ruling and revise them as necessary to ensure compliance .
Indeed, a key takeaway from Brinker is something of which most defendant employers are already keenly aware – the importance of having facially compliant policies when it comes to wage-and-hour practices. Certification was denied with regard to the off-the-clock claim precisely because of the defendant’s compliant policies. Conversely, the rest break claims were certified in large part because of the lack of a compliant policy. The Supreme Court’s endorsement of the Dukes principle that “what really matters to class certification” is “dissimilarity that has the capacity to undercut the prospects for joint resolution” portends that going forward, defendants will have a strong argument against class certification where a case involves individualized variations from a compliant policy. (Slip. Op. at 9 fn.5 (quoting Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 131 (2009).))
Nonetheless, it appears unlikely that Brinker will limit putative class actions to the degree that defendants had hoped for and, accordingly, significant caution remains warranted. The Court’s disinclination to decide the certification issue with regard to the meal period claims ensures that some level of ambiguity will continue to exist, and the Court’s express instruction to certify the rest break claims – albeit on a set of facts somewhat specific to Brinker Restaurant Corp. – will no doubt refocus the plaintiffs’ bar’s attention on those claims.
Lastly, it is worth noting that Brinker may have the effect of drawing a distinct line between (i) meal period claims that assert that employees were forced to work through recorded meal periods and (ii) meal period claims that assert that employees were forced to not take recorded meals. The majority opinion pointed out that the fact “that employees are clocked out creates a presumption they are doing no work, a presumption . . . the putative class members have the burden to rebut.” (Slip. Op. at 52.) By contrast, the concurring opinion signed by Justice Werdegar and Justice Liu emphasizes that because employers have an obligation to keep records of when meal periods are taken, “[i]f an employer’s records show no meal period for a given shift over five hours, a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided.” (Concur. Slip Op. at 1-2.) The concurrence went on to say that the argument that the employee waived a meal is an affirmative defense for which the employer would bear the burden of proof. To the extent that lower courts adopt this approach, the burden of proof on a meal period claim will shift depending on what is asserted.