The California Supreme Court has clarified in Ferra v. Loews Hollywood Hotel, LLC that meal, rest, and recovery break premiums must be paid at the same “regular rate of pay” that employees receive for purposes of overtime.  

This means that the calculation of meal, rest, and recovery break premium payments must include the employee’s base hourly rate as well as other compensation such as commissions, non-discretionary bonuses, and reduced or free lodging. 

Unfortunately, this decision applies retroactively which means that employers could face liability if they issued premium pay at an employee’s base rate before the decision was issued.

It is recommended that employers ensure that they address any employee underpayments as a result of this decision and that they include separate line items on employee pay stubs reflecting rest, meal, and recovery break premiums paid to employees. Employers should also have their employee pay practices reviewed by competent employment counsel to ensure that the premium payments are being issued accurately and in compliance with the California Supreme Court’s recent decision.

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