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California Supreme Court Clarifies Whether Missed-Break Premiums Are ‘Wages’ That Trigger Derivative Penalties

On May 23, 2022, the California Supreme Court issued its decision in Naranjo v. Spectrum Sec. Servs. Inc. (Naranjo), holding that meal and rest break premiums (also known as extra pay or premium pay) constitute “wages” that: (1) must be accurately reported on employee wage statements pursuant to Labor Code section 226 and (2) must be timely paid to employees to avoid waiting time penalties pursuant to Labor Code section 203. The Court explained that “although the extra pay is designed to compensate for the unlawful deprivation of a guaranteed break, it also compensates for the work the employee performed during the break period.” Thus, employees may be entitled to wage statement penalties and waiting time penalties where the employee worked through their break.

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California Supreme Court Decision Places Higher Burden on Employers in Whistleblowing Retaliation Claims

On January 27, 2022, the California Supreme Court provided clarification in Lawson v. PPG Architectural Finishes, Inc. to lower California courts reviewing whistleblower retaliation claims. In what it calls an “unsurprising” decision, the California Supreme Court concluded that the framework prescribed by California Labor Code section 1102.6, rather than the McDonnell Douglas test, must be used in whistleblower claim evaluations. The impact of this decision is that employees will have a lower burden to meet to demonstrate that their alleged whistleblower activities resulted in an adverse employment action, while employers will have to meet a higher burden requiring them to demonstrate by clear and convincing evidence that they did not retaliate based on the employee’s activities.

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