Naranjo v. Spectrum Security Services, Inc.

Naranjo v. Spectrum Security Services, Inc.

Opinion

KRUGER, J.—California law requires employers to provide daily meal and rest breaks to most unsalaried employees. If an employer unlawfully makes an employee work during all or part of a meal or rest period, the employer must pay the employee an additional hour of pay. (Lab. Code, § 226.7, subd. (c); Industrial Welf. Com. wage order No. 4-2001, §§ 11(B), 12(B).)  [*102] The primary issue before us is whether this extra pay for missed breaks constitutes “wages” that must be reported on statutorily required wage statements during employment (Lab. Code, § 226) and paid within statutory deadlines when an employee leaves the job (id., § 203). We conclude, contrary to the Court of Appeal, that the answer is yes. 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. (See Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1104 [56 Cal. Rptr. 3d 880, 155 P.3d 284].) The extra pay thus constitutes wages subject to the same timing and reporting rules as other forms of compensation for work.

We also resolve a dispute over the rate of prejudgment [**3]  interest that applies to amounts due for failure to provide meal and rest breaks. Here, we agree with the Court of Appeal that the 7 percent default rate set by the state Constitution applies. (See Cal. Const., art. XV, § 1.)

Defendant Spectrum Security Services, Inc. (Spectrum), provides secure custodial services to federal agencies. The company transports and guards prisoners and detainees who require outside medical attention or have other appointments outside custodial facilities. (Naranjo v. Spectrum Security Services, Inc. (2009) 172 Cal.App.4th 654, 660 [91 Cal. Rptr. 3d 393] (Naranjo I).) Plaintiff Gustavo Naranjo was a guard for Spectrum. Naranjo was suspended and later fired after leaving his post to take a meal break, in violation of a Spectrum policy that required custodial employees to remain on duty during all meal breaks. (Naranjo v. Spectrum Security Services, Inc. (2019) 40 Cal.App.5th 444, 453–454 [253 Cal. Rptr. 3d 248] (Naranjo II).)

Naranjo filed a putative class action on behalf of Spectrum employees, alleging that Spectrum had violated state meal break requirements under the Labor Code and the applicable Industrial Welfare Commission (IWC) wage order.³ (Lab. Code, § 226.7; IWC wage order No. 4-2001, § 11.)⁴ The complaint sought an additional hour of pay—commonly referred to as  [*103] “premium pay”—for each day on which Spectrum failed to provide employees a legally compliant meal break. (See Lab. Code, § 226.7, subd. (c); IWC wage order No. 4-2001, [**4]  §§ 11(B), 12(B).)

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