The Schwarzenegger Administration has put an end to letting its Deputy Labor Commissioners follow Tomlinson v. Indymac Bank, F.S.B. (2005 WL 469291) 359 F.Supp.2d 891. The following memo has been circulated at the DLSE:
DIVISION OF LABOR STANDARDS ENFORCEMENT MEMORANDUM
DATE: June 17, 2005
TO: DLSE Staff
FROM: Donna M. Dell Labor Commissioner
SUBJECT: Precedent Decision – Case No. 12-56901RB
Section 11425.60 of the California Government Code allows for the designation as a “precedent decision” any decision that contains a significant legal or policy determination of general application that is likely to recur. The Division’s authority to designate a decision as a precedent is not subject to judicial review and is not viewed as an underground regulation. Precedent decisions are binding on any case before the Division’s Deputy Labor Commissioners and Hearing Officers to the extent that they include the same legal or policy issues determined in the precedent.
In response to the continuing confusion and frustration expressed to me regarding the lack of interpretive authority available to the Division on the issue of meal and rest breaks, I am designating the attached Order, Decision or Award (ODA) in the matter of Hartwig v. Orchard Commercial, Inc., Case No. 12-56901RB as a Division of Labor Standards Enforcement (DLSE) Precedent Decision until such time as applicable regulations are in effect.
Pursuant to Section 11425.60 this Precedent Decision shall be indexed, made available to the public and publicized annually in the California Regulatory Notice Register.
I hope that this determination will help to alleviate any confusion you may have and provide consistency going forward. As always, please do not hesitate to call if you have any questions.
Donna M. Dell
The important part of the decision attached to this memo is quoted here:
The purpose, therefore, of the initial provision relating to the one hour of pay, was to enforce the requirements and to deter non-compliance clearly indicating intent to create a penalty. Labor Code § 226.7 was based on the IWC Order language and its purpose is to deter employers from violating IWC imposed rules for meal breaks. Determination is that the payment for missed meal periods is a penalty.
The logic of this decision escapes me. If the purpose (as if there is just one purpose) is to enforce the law and deter violations, rather than to compensate overworked employees, why is it that a minimum wage worker only gets $6.75, while a worker who makes $27 per hour gets four times as much pay for the same violation? There are a great many other reasons why the hour of pay should be considered a wage under Labor Code § 200, but rather than belabor the point in this already-long post, we'll wait and see what the Supreme Court eventually does with the issue.
We debated whether to mention this DLSE memo, since it has no precedential value in the Superior Court, and, although well-informed defense firms will be using this as an argument to persuade the trial courts to change their minds about Section 226.7 wages, not all defense firms are so informed. But we see now that the dark side blogs are talking about it, so we might as well weigh in.
Meanwhile, back in the trenches, the Orange County Superior Court complex litigation panel continues to rule consistently that the hour of pay is a wage. See, e.g., Judge Sunvold's decision of June 23, 2005 in Rubio v. New Century Mortgage:
"Defendant is incorrect in its assertion that there was no private right to pursue the remedies under Labor Code Section 226.7 prior to the enactment of the Private Attorney General Act. This Court has consistently found in prior cases that the sums due under Section 226.7 are wages, not penalties and an employee has a private right to seek his or her wages. The statute is clear on its face that the amounts due are wages and not penalties."
If you know of any appellate cases making their way toward a published opinion on this issue, please let us know.