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Ferra v. Loews Hollywood Hotel, LLC (SC S259172 per curiam 7/15/21) Regular Rate of Pay Encompasses Nondiscretionary Payments  

By July 15, 2021Uncategorized

Under California law, employers must provide employees with overtime pay when employees work more than a certain amount of time.  (Lab. Code, § 510, subd. (a) (section 510(a)); all undesignated statutory references are to this code.)  To calculate overtime pay, section 510(a) requires an employer to compensate an employee by a multiple of the employee’s “regular rate of pay.”  California law also provides for meal, rest, and recovery periods.  If an employer does not provide an employee with a compliant meal, rest, or recovery period, section 226.7, subdivision (c) (section 226.7(c)) requires the employer to “pay the employee one additional hour of pay at the employee’s regular rate of compensation.”

The question here is whether the Legislature intended “regular rate of compensation” under section 226.7(c) to have 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 nondiscretionary payments for work performed by the employee.  We hold that the terms are synonymous:  “regular rate of compensation” under section 226.7(c), like “regular rate of pay” under section 510(a), encompasses all nondiscretionary payments, not just hourly wages.