Breaks & Expense Reimbursements
Table of Contents
- Hourly employees are entitled to full, uninterrupted, timely, off-duty meal and rest breaks or they are owned premium pay.
- Meal Breaks (Hourly employees)
- Rest Breaks (Hourly employees)
- Premium Pay for Meal and Rest Break Violations
- Employers must reimburse employees for their necessary and reasonable business expenses incurred.
- Reimbursement of Necessary Business Expenses
- Mobile Devices & Internet
- Remote Work
- Common Wage-and-Hour Mistakes
Hourly employees are entitled to full, uninterrupted, timely, off-duty meal and rest breaks or they are owned premium pay.
Meal Breaks (Hourly employees)
- Unpaid. Meal breaks need not be paid. But employers can pay employees during meal breaks if they wish. No matter what, though, employers must provide hourly employees with an unpaid, uninterrupted, timely, duty-free meal break of at least 30 minutes. Labor Code § 512.
- First Meal Break. Employers must “provide” a first meal break to hourly employees of at least 30-minutes duration. Labor Code § 512 (a); California Code of Regs., tit. 8 § 11010-11170 (11).
- Second Meal Break. Employer must provide a second meal break to employees who work more than 10 hours in a day. Labor Code § 512 (a); California Code of Regs., tit. 8 § 11010-11170 (11).
- Timing. The first meal period must begin no later than the end of the 5th hour of work/start of the 6th hour of work, and the second meal period must begin no later than the end of the 10th hour of work/start of the 11th hour of work.
- Recording Meal Breaks. Employers must keep a record of start and end clock times for each meal period. It is not enough to simply show that a half hour meal break was taken during the day — the timecard must reflect the actual clock times. Labor Code § 1174; California Code of Regs., tit. 8 § 11010-11170 (7); Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012).
- No Rounding. On February 25, 2021, the California Supreme Court issued its opinion in Donohue v. AMN Services, LLC, holding that (1) employers cannot round meal break clock in and out punches, and (2) time records showing late, short, interrupted, and/or missed meal break amounts to a rebuttable presumption of a violation at the summary judgment stage.
- Policies. Meal break policies must relieve employees of all duties during meal periods, relinquishes control over employees’ activities, including the ability to leave the premises during meal periods, provide employees with a reasonable opportunity to take meal periods, and not impede or discourage employees from taking meal periods. Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012).
- Waiver. Employees may waive their meal break if the day’s work will be completed in no more than six hours, provided the employer and the employee mutually consent to the waiver. It is a best practice to have this waiver in writing, but it is not required. Employers must provide a second meal break of no fewer than 30 minutes for all workdays on which an employee works more than 10 hours. An employee can waive the second meal break only if the total hours worked on that workday are not more than 12; the employer and employee mutually consent, and the first meal break of the workday was not waived. Labor Code § 512 (a).
- “On Duty” Meal Breaks. If the employee is required to remain on the employer’s premises or job site, the employee must be paid for the meal break. Bono v. Bradshaw, 32 Cal. App. 4th 968 (1995). An “on-duty” meal break is permitted only when the nature of the work prevents an employee from being relieved of all duty, it is agreed to in writing by the employer and the employee, it is paid, and it can be revoked at any time in writing by the employee. Otherwise, it is an illegal on-duty meal break, triggering one hour of premium pay. California Code of Regs., tit. 8 § 11010-11170 (11).
- Exceptions. Special meal break rules exist for employees employed by ambulance, construction, drilling, logging and mining, residential care, healthcare, motion pictures, broadcast, and wholesale baking companies, and union employees covered by collective bargaining agreements
Rest Breaks (Hourly employees)
- Paid Rest Breaks. Rest breaks are paid. They are treated as hours worked for pay and overtime purposes. Hourly employees should not clock out for rest breaks. Hourly employees are entitled to take a paid 10-minute rest period during the middle of each 4-hour work period. They are not entitled to a rest period if they work less than 3.5 hours in the work day. California Code of Regs., tit. 8 § 11010-11170 (12).
- Length. Rest breaks must be offered at the rate of 10 “net” minutes for every four hours worked, or “major fraction thereof.” Anything more than two hours is considered to be a “major fraction” of four hours. Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012).
- Suitable Facilities.Most employers must provide suitable resting facilities that are available for employees during working hours in an area separate from the toilet rooms. California Code of Regs., tit. 8 § 11010-11170 (13).
- Timing. Employees working on a workday of: more than 3.5 hours, up to 6 hours, get one paid 10-minute rest period; more than 6 hours, up to 10 hours, get two paid 10-minute rest-periods; more than 10 hours, up to 14 hours, get three paid 10-minute rest periods; and so forth. Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012).
- Relinquishing Control. Employers may not require employees to remain “on-call” during rest periods, even if they don’t actually perform any work. During required rest breaks, employers must provide an uninterrupted break that relieves “their employees of all duties,” and relinquishes “any control over how employees spend their break time.” Relinquishing control means that employees are free to take a brief walk of five minutes out and five minutes back or complete a phone call to arrange for child care. Augustus v. ABM Security Systems, Inc., 2 Cal.5th 257 (2017).
- Separately Paying Piece Rate and Hourly Commission Employees. Employers must ensure that employees with certain compensation plans are paid separately for rest breaks. Employers must compensate piece rate employees for rest and recovery periods and all other periods of “nonproductive time” separately from any piece rate pay. Labor Code § 226.2. Employers must compensate commissioned sales employees separately for rest breaks, even if the the commission plan ensured the employees always received more than the minimum wage for every hour worked. Vaquero v. Stoneledge Furniture, LLC, 9 Cal.App.5th 98 (2017).
- Lactation Rest Breaks. Employers must provide a reasonable amount of break time and a private place for employees to express breast milk. Labor Code §§ 1030-1033.
Premium Pay for Meal and Rest Break Violations
- Meal Break Violation. When employers fail to provide an employee a meal break, they are required to pay the employee an extra one hour of pay at the employee’s regular hourly rate. California Code of Regs., tit. 8 § 11010-11170 (11) [“If an employer fails to provide an employee a meal period in accordance with the applicable provisions of this order, the employer shall pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each workday that the meal period is not provided.”].
- Rest Break Violation. When employers fail to provide an employee a rest break, they are required to pay the employee an extra one hour of pay at the employee’s regular hourly rate. California Code of Regs., tit. 8 § 11010-11170 (12). If the employee misses multiple rest breaks or meal periods, they can earn up to one extra hour per workday for their missed rest periods and an additional one hour per workday for their missed meal breaks. Labor Code § 226.7 (c); California Code of Regs., tit. 8 § 11010-11170 (11), (12).
- Pay for Work. If an employer has appropriately provided meal and rest periods, but an employee chooses to work anyway, the employer will have to pay for the time worked, but will not be liable for the “premium pay” hour (which most employers refer to as a meal or rest period “penalty”), unless the employer causes its employees to miss a meal or rest period due to scheduling or other employer needs.
- Amount of Premium Pay. On July 15, 2021, The California Supreme Court issued its opinion in Ferra v. Loews Hollywood Hotel, LLC, holding that the “regular rate of compensation” under section 226.7(c) has the same meaning as “regular rate of pay” under section 510(a), such that the calculation of premium pay for a noncompliant meal, rest, or recovery period, like the calculation of overtime pay, must account for not only hourly wages but also other non-discretionary payments for work performed by the employee.
- Triggering other Penalties. It is an open question of law whether or not the one hour of premium pay for meal break violations should be treated as a “wage” instead of a penalty and thus must be accurately reported on wage statements per Labor Code § 226(a), included in the final pay per Labor Code § 203, and subject 10% interest. The California Supreme Court is reviewing the the question in Naranjo v. Spectrum Security Services, 40 Cal.App.5th 444 (2019).
Employers must reimburse employees for their necessary and reasonable business expenses incurred.
Reimbursement of Necessary Business Expenses
- Employers must reimburse employees for all monies that they necessarily expend or lose, directly related to performing their duties or following employer directions. Labor Code § 2802. This includes “all reasonable costs, including, but not limited to, attorney’s fees incurred by the employee enforcing” these rights. Labor Code § 2802(c).
- Employees right to reimbursement of business expenses cannot be waived or released; any contract that tries to do so is void. Labor Code § 2804.
- Whether or not an expense is reimbursable does not depend on whether the employee made a request for reimbursement. The employer’s obligation to reimburse is triggered once they have actual or constructive knowledge of the employee’s expense. Stuart v. Radioshack Corp., 641 F.Supp.2d 901 (N.D. Cal. 2009).
- The IRS sets annual mileage rates to reimburse for business miles driven. The mileage rate is based on the study of vehicle operating cost that is conducted annually for the IRS. It is considered the most reasonable reimbursement rate by California state agencies.
- Employers may reimburse employees for mileage at or below the IRS rate as long as the chosen rate covers all actual expenses incurred. This includes not only gas, but also wear and tear, maintenance, and insurance.
- Anything beyond the IRS rate may be taxable as wages if the chosen rate exceeds actual expenses. Employers may only use a lower mileage rate than the IRS rate if the lower rate sufficiently reimburses employees for their actual expenses.
- If uniforms are required by an employer, the employer must provide and maintain them if the uniform: includes apparel and accessories of a distinctive design or color (even if the style is not specified); and, does not include required apparel or accessories that are generally used by employees working the same job for other employers (e.g., a white nurse’s uniform). California Code of Regs., tit. 8 § 11010-11170 (9); DLSE Opinion Letters 1994.02.16-1, 1991.02.13.
- Uniforms that require minimal maintenance (i.e., are wash and wear) may be maintained by the employee. Otherwise, employers must reimburse the expense. California Code of Regs., tit. 8 § 11010-11170 (9); DLSE Opinion Letters 1994.02.16-1, 1991.02.13.
- Employers requiring that employees undergo a training course must generally reimburse for the cost of the course. Labor Code § 2802.
- Some jobs require a specific type of license in order to legally practice in that field, such as real-estate agents, cosmetologists, registered nurses, attorneys and so forth. There is difference between training costs required by law, such as a license required by the state, versus employer-required training..
- Employers are not required to reimburse employees for the cost of the basic training required to obtain such licenses. But if you require specialized training in addition to the licensing requirements, you will need to reimburse the employee for those expenses. DLSE Opinion Letter No. 1994.11.17; DLSE Enforcement Manual § 126.96.36.199.
- There is generally no requirement that employers pay for training leading to licensure or the cost of licensure for an employee. If the license is required by the state or locality as a result of public policy, the employee bears the cost of licensing. But if the license is not actually required by statute or ordinance but the employer requires the training and/or licensing simply as a requirement of employment, the employer must reimburse for the cost. DLSE Opinion Letter No. 1994.11.17; DLSE Enforcement Manual § 188.8.131.52.
Mobile Devices & Internet
- Employees must be reimbursed for work-related calls on personal cell phones, even where they do not incur any extra expenses because of the job. There is no clear-cut formula for what constitutes “reasonable” portion of an unlimited plan. Cochran v. Schwan’s Home Service, Inc., 228 Cal.App.4th 1137 (2014).
- Employers are required to compensate employees for a portion of personal mobile phone bill, regardless of whether it the employee actually pays an additional amount for work use or not. Herrera v. Zumiez, Inc., 2020 WL 1301057 (9th Cir. March 19, 2020).
- Internet and cell phone expenses are reimbursable if the cost is a “reasonable reimbursement for the mandatory use of personal devices.” Aguilar v. Zep Inc., 2014 WL 4245988 (N.D. Cal. Aug. 27, 2014).
- Whether certain expenses must be reimbursed will depend on whether the telework arrangement and/or related expenses are optional (i.e., either because they are not necessary to perform job duties or are available in the office).
- Employers that require remote or telework must either provide to the remote employee or reimburse them for all necessary expenses incurred with the remote work. This typically includes: computer/laptop; internet; mobile device, apps or software; printers/scanners; office supplies, such as pens, paper, printer cartridges; ergonomic office furniture.
- Internet and phone expenses incurred by remote workers are not reimbursable as “necessary” expenses where:
- The telework arrangement was optional;
- The employer made physical workspaces available in the corporate office with computers, phones, and other necessary equipment for employees to perform work; and
- The employer approved employee schedules splitting time between working from home and in the office. Novak v. Boeing Co., 2011 WL 9160940 (C.D. Cal. July 20, 2011).
Common Wage-and-Hour Mistakes
- Not paying by the hour, overtime, and providing breaks, and instead paying by salary when the job duties don’t meet the exemption.
- Not capturing all time worked by allowing hourly employees to work “off the clock,” or illegally “rounding” employee time at the beginning or end of the shift or meal breaks.
- Not paying an applicable local ordinance minimum wage rate that is higher than the California state rate.
- Not paying time and a half for all hours over 8 in a day, and/or 40 in a week, and instead only paying weekly overtime.
- Not accounting for commission, bonuses or other payments beyond the hourly rate (such as free meals) in calculating overtime pay.
- Not providing employees with an uninterrupted 30 minute meal period after the fifth hour of the shift.
- Not providing a 10 minute rest break for each four hour work period.
- Not providing meal breaks because of an “on-duty” or “waiver” agreement in situations that do not apply.
- Not relieving employees of all duties, including monitoring of devices, during rest breaks.
- Not providing meal or rest breaks on time, and instead scheduling them late.
- Not providing separate meal and rest breaks, and instead combining them.
- Not allowing for meal or rest breaks to be uninterrupted, and instead communicating with employees on break.
- Not permitting employees to leave the worksite while on a meal or rest break.
- Not paying employees for time spent working during breaks, even if the premium for failing to provide the break is paid.
- Not having an employee policy on meal or rest breaks that addresses entitlement to second breaks.
- Not paying an extra hour of pay for each missed meal and/or rest break at the correct rate.
- Not compensating employees for all employment expenses (such as uniforms, automobile mileage, etc.).
- Not providing “cool down” periods for employees working in hot temperatures.
- Not providing suitable seating when the job calls for it.
- Not providing paid sick days per California law and local ordinance.
- Not permitting employees to use or cash out earned vacation during employment or when furloughed for more than a pay period.
- Not paying earned wages in a timely manner.
- Not providing all required information on pay stubs, especially the amount of time worked at each hourly rate during the pay period.
- Not paying all earned wages, including earned vacation, within 24 hours of termination.