Los Angeles, Calif. (November 23, 2020) - In an uncharacteristically employer-friendly decision, the California Court of Appeal, Third Appellate District, held that employees could not recover both unpaid minimum wages and one-hour premiums for unpaid rest break claims. The holding in Alfredo Sanchez v. Miguel Martinez offers a mechanism for employers to defend against plaintiff employees seeking double recovery in the future. However, the Sanchez court did not go so far as to narrow plaintiffs' potential theories of liability.

Factual Background

In Sanchez, a group of farm laborers filed a wage and hour lawsuit alleging, among other claims, that the employer failed to permit paid rest breaks. The laborers were paid on a piece rate basis per grapevine pruned. They asserted that they were not paid their piece rate, or any wage rate, during their 10-minute rest breaks. Accordingly, the laborers sought double recovery, seeking both payment of minimum wage for the actual unpaid break time and a rest break premium.

The Court of Appeal's Decision

Relying on Bluford v. Safeway, Inc., the Court held that as a preliminary matter, rest periods must always be separately compensated in a piece-rate system, either at the applicable legal minimum wage or the contractual hourly rate. 216 Cal.App.4th 864, 872 (2013). In the instant case, the plaintiffs' theory of liability was based on their employer's failure to actually compensate their rest periods. The plaintiffs demanded both unpaid wages for certain hours worked (as their rest breaks should have been compensated), while also seeking rest period premiums for unpaid rest periods. The Court held that the plaintiffs' theory of liability for rest break premiums under Labor Code § 226.7 was valid, even though the California courts generally apply Labor Code § 226.7 to cases involving employees who were required to work during rest periods. Thus, the Court confirmed that Labor Code § 226.7 also applies when employers provide rest breaks that are unpaid, as in the present scenario.

Although the Court of Appeal found both theories of liability to be legitimate, it explained that the plaintiffs could not recover under both simultaneously. The rationale was guided largely by the rule against double recovery. Double recovery is prohibited for the same category of damages, as it would amount to overcompensation. Here, both theories of recovery sought compensation for the same harm – the employer's failure to pay for authorized rest breaks.

How Employers Are Affected

In a state where court rulings generally favor the employee, the Sanchez opinion plays in the employer's favor when facing an onslaught of wage and hour allegations seeking double recovery or "stacking" of penalties. The decision provides a concrete basis for arguing against similar double recovery and/or "stacking" of penalties claims, effectively reducing potential exposure in individual and collective wage and hour actions.

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