Sit Down. Rest for a Period. OK, Now Get Up and Rewrite All Your Policies and Procedures.

The California Supreme Court has just issued a Christmas present to the plaintiffs' bar. The Court was generous with a coal delivery to employers as well.  

OK, holiday segue over.  Whatever you thought you knew about rest breaks in California was wrong.  The high Court today decided Augustus v. ABM, which presented two issues: 

1.  Must an employee be relieved of all duty for a paid, ten-minute, rest period? 

2.  If you are "on call" during a  rest period, does it count as a lawful break? 

The Court in a 5-2 opinion decided these questions "Yes," and "No." And that means employers must institute major changes and that there will be waves of new class action lawsuits in 2017.  

A Little Background

The case arose in the security guard industry.  ABM required its guards to take rest breaks with pagers in case there was a need for their services.  There was disputed evidence over whether they actually were bothered during breaks, and how often.  There was evidence that employees were able to surf the internet, eat snacks, etc. even while tethered to that pager for the ten minutes of break time that must occur every four hours (or major fraction thereof) under California law.  

A trial judge in LA granted the plaintiffs' motion for summary judgment and awarded the class some $90 million in penalties, including an hour of penalty time for each day worked.  Because the employees were on call, the trial court said, they were NEVER on break.  The court of appeal reversed that decision and held that being on call, without being called, is still a break. 

Supreme Court Decision 

The Supreme Court, however, agreed with the trial court. Here is the Court's rule regarding rest periods:

state law prohibits on-duty and on-call rest periods. During required rest periods, employers must relieve their employees of all duties and relinquish any control over how employees spend their break time.  

I'll spare you the analysis.  Essentially, the Court decided that only a completely duty-free rest period fulfills the Legislature's intent of promoting employee welfare and safety. Justice Cuellar, one of the two new justices, authored the majority opinion.  The other new member of the Court, Justice Kruger, wrote a concurring / dissenting opinion, joined by Justice Corrigan.

This holding has several consequences:

1.  Relieving employees of all duties is the same standard as the Court previously applied to meal periods in the Brinker case.  Yes, rest periods are paid, while meal periods are not.  Yes rest periods  are only 10 minutes; meal periods are 30 or more.  None of that matters.  

2.  To ensure the employee is relieved of all duty, employers must treat employees during rest periods the same as they are treated for meal periods. No rest breaks at your desk or in the work area if being in the work area means the employee is even potentially going to be interrupted.  No requiring employees to help customers if they come in during the break.  Potential interruption - being on call - means a non-compliant break.  A non-compliant break means a one-hour penalty per day.   

3.   Employers should schedule rest periods and should be able to explain how there is "coverage" for the employees on break. Breaks should be structured and managed so the employee is incapable of helping a customer or even discussing work with a manager.  There should be a rest area, where management is trained employees are off limits.  Or, if possible, employers may require employees to leave the work area or go outside.   Employers in certain circumstances may have to consider hiring extra workers to cover rest periods to prove that they receive employees of all duty. 

4.   "Relinquishing control" requires changes.  It was generally understood that an employer could restrict an employee from leaving the work premises during a paid rest period.  Under California law, prohibiting employees from leaving the premises is "control."  That is why employers cannot restrict employees from leaving during meal periods. Recognizing that rest breaks are shorter than meal periods, the Supreme Court expressly stated that an employee's inability to leave the premises and timely return from break does not constitute employer "control" in the rest break context. But the Court did not say employers can require employees to remain on premises, either.  So, from a risk avoidance standpoint, the safer practice is to banish employees from the work area. (Of course, if an employee returns from break late, the employee is subject to discipline. And that employee will claim retaliation for taking a break.)  

5.  Naturally, employers may find the above restrictions unreasonable. When interruptions happen, as they must from time to time, the Court noted that the break can be rescheduled, or the employer can pay the penalty.  However, the Court also mentioned that regular interruptions are not allowed.

6.  Employers' rest period policies should affirmatively state that employees are free from any duty, must take breaks as scheduled, and are prohibited from working, being available to work, etc. during rest periods. 

7.  The Court noted that the DLSE has the power to grant exemptions under certain circumstances when it is impossible to afford employees completely duty free breaks.  The exemption provision is section 17 of Wage Order No. 4.  Employers may wish to become familiar with this provision and, if appropriate, use it. 

17. EXEMPTIONS
If, in the opinion of the Division after due investigation, it is found that the enforcement of any provision contained in Section 7, Records; Section 12, Rest Periods; Section 13, Change Rooms and Resting Facilities; Section 14, Seats; Section 15, Temperature; or Section 16, Elevators, would not materially affect the welfare or comfort of employees and would work an undue hardship on the employer, exemption may be made at the discretion of the Division. Such exemptions shall be in writing to be effective and may be revoked after reasonable notice is given in writing. Application for exemption shall be made by the employer or by the employee and/or the employee’s representative to the Division in writing. A copy of the application shall be posted at the place of employment at the time the application is filed with the Division.

8. Caveat: This case is decided under Wage Order 4, a wage order that applies to many office workers and other occupations not covered by the Industry Orders.  The other Wage Orders also contain rest period provisions. Some are different (such as Wage Order 5's).  So, read your wage order and know which one(s) apply before assuming Augustus is applicable to your business. (In most cases, it is.)  

Status of On-Call / Standby Time After Augustus?

You may ask yourself, if merely carrying a pager does not constitute being "relieved of duty," then must I now pay my employees when they are at home, "on call"?  And must unpaid on-call employees be given paid, duty free rest periods? 

No. The standards regarding rest breaks at work are not the same as the standards applicable to employees who are "on call" at home.  Why? Because the Supreme Court said so:

Plaintiffs argue that the on-call break time here constituted compensable work under Mendiola, supra, 60 Cal.4th 833, so there was no way it could satisfy ABM‘s obligation to provide duty-free rest periods. ABM cites Mendiola for the opposite proposition. But Mendiola is distinguishable. For one thing, shifts lasting eight hours (e.g., Mendiola) or longer (Madera Police Officers Assn. v. City of Madera (1984) 36 Cal.3d 403, 412 [involving 24-hour shifts]) are significantly different from breaks, which are short in duration, break up work periods, and thereby protect employees‘ health and safety (Murphy, supra, 40 Cal.4th at p. 1113). For another thing, factors relevant to the extent of employer control during an on-call shift of eight hours or more are inapposite in the context of a rest or meal period. (Mendiola, at p. 841 [e.g., on-premises living requirement, excessive geographical restrictions, etc.].)

The Court's statement, appearing in a footnote, means that this case has nothing to do with "on call" time occurring when the employee is punched out.

So, that's Augustus v. ABM.  The opinion is here.  It is a major decision about rest periods that require virtually all employers to review policies and make changes. 

Court of Appeal Finds Rest Periods Valid Even If Employees Potentially Could be Interrupted

The Court of Appeal ruled that security guards' rest periods were lawful, even though employees might have to respond to an emergency call during a rest period.  We're especially happy about this decision because we wrote an amicus curiae brief supporting the employer on behalf of the California Chamber of Commerce.

As explained by the Court:

Plaintiff Jennifer Augustus and others, formerly security guards employed by defendant ABM Security Services, Inc. (hereafter ABM), allege on behalf of themselves and a class of similarly situated individuals that ABM failed to provide rest periods required by California law in that it failed to relieve security guards of all duties during rest breaks, instead requiring its guards to remain on call during breaks. 

So, the security guards were posted a job sites, where they were responsible for ensuring the security of the property, responding to calls, etc.  They were provided rest periods in accordance with the law (at least 10 minutes, paid, for each four hours of work).  But

ABM admitted it requires its security guards to keep their radios and pagers on during rest breaks, to remain vigilant, and to respond when needs arise, such as when a tenant wishes to be escorted to the parking lot, a building manager must be notified of a mechanical problem, or an emergency situation occurs. 

Of note, the plaintiffs did not provide any evidence that an employee's rest period was actually interrupted. Ever. However, The trial court ruled that the Plaintiffs' rest periods were not valid, because of the potential for interruption.  The trial court also awarded the class $90 million in rest period premiums and penalties because every rest period was noncompliant.

The Court of Appeal disagreed.  In doing so, it analyzed what the employer must do to authorize and permit a valid rest period.  Here's the meat of the analysis:

The text of the wage order does not describe the nature of a rest period, but section 226.7 offers a partial definition: “An employer shall not require an employee to work during a meal or rest or recovery period.” (Italics added.)   *** Section 226.7 therefore provides our only guidance as to the nature of a rest break, and it says only that an employee cannot be required “to work” during a break. ***

Not only did the IWC decline to distinguish between on- and off-duty rest periods, its prescription that on-duty meal periods be paid, coupled with the mandate that all rest periods be paid, implies rest periods are normally taken while on duty, i.e., while subject to employer control. There is no support, therefore, in the text of Wage Order No. 4, the Labor Code, or any DLSE opinion letter for plaintiffs’ claim that a rest break is valid only if the employee is relieved of all duties. ***

After a petition for rehearing, the Court considered the effect of Mendiola v. CPS Security Solutions, a recent California Supreme Court decision that we blogged here.  There, the Supreme Court held that time an employee was required to remain on premises was compensable as hours worked, even though the employees were permitted to sleep and were not formally "on duty."  The Court rejected the plaintiff's argument that Mendiola required the court to hold that being on-call means no rest period:

On-call status is a state of being, not an action. But section 226.7 prohibits only the action, not the status. In other words, it prohibits only working during a rest break, not remaining available to work. * * *

“In sum, although on-call hours constitute “hours worked,” remaining available to work is not the same as performing work. (See Mendiola, supra, 2015 Cal. LEXIS at p. 9 [distinguishing readiness to serve from service itself]; see also Cal. Code Regs., tit. 8, § 11040, subd. 2(K) [distinguishing “hours worked” from work actually performed].) Section 226.7 proscribes only work on a rest break.” 

The Court then held that the trial court properly certified the class. However, the effect of that part of the ruling is to doom the entire class's claim.

This case is Augustus v. ABM Security Services, Inc. and the opinion is here.  Please note, however, that the court modified the opinion at the end, and the modifications have not yet been integrated into the main opinion.

Have a restful weekend!