In Palacio v. Jan & Gail’s Care Homes, Inc. (Ct. of Appeal F070861), published December 7, 2015, the Court of Appeal for the Fifth Appellate Court ruled against a health care worker who sued to recover penalties for meal breaks she agreed to waive over a 14 year period of employment. The Court held employees of 24-hour health care providers could be required to permanently waive their right to take meal breaks despite language contained in the Labor Code that allows employees in certain instances to revoke their waiver agreement.
Plaintiff Yvonne Palacio worked as a residential caregiver for Jan & Gail’s Care Homes, Inc. (“Care Homes”) from 1999 to 2013. She, along with all employees of Care Homes, was required to sign an agreement waiving her right to an off-duty, unpaid, 30 minute lunch break. Instead, plaintiff was required to eat with her patients. She was paid for this time and the lunch was provided by Care Homes. Plaintiff and Care Homes agreed the meal waiver was covered by California Industrial Welfare Commission Wage Order No. 5-2001 (“Wage Order 5”) subdivision 11(E) which allows 24-hour residential care facilities to require its employees to waive meal breaks if the “employee eats with residents during residents’ meals and the employer provides the same meal at no charge to the employee.”
Plaintiff was terminated in late 2013. She subsequently sued Care Homes contending Care Homes was obligated under California’s Labor Code to inform employees they had the right to revoke the agreement to waive meal breaks. She also sought class certification for all former and current Care Homes employees contending their rights were also violated.
According to plaintiff, because Care Homes failed to inform her and other employees of their right to revoke the meal periods waiver, Care Homes violated California Labor Code section 226.7(c) and had to pay an hour of “premium pay” for each meal or rest break worked. (Section 226.7(c) requires an employer to pay an employee “one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided.”) Under plaintiff’s theory, an employer would be required to pay an affected employee an hour of premium pay for each meal and rest period she worked over the entire length of employment. In plaintiff’s case, this theoretically would mean a payout of over 10,000 premium hours.
Care Homes argued it fully complied with the Labor Code. It argued the waiver language in subdivision 11(A) did not apply to subdivision 11(E). Since the purpose of 11(A) was to ensure patients received continuous care, Care Homes contended allowing an employee to revoke his or her agreement under 11(E) would endanger the welfare of patients and their need for 24-hour care.
In September 2014, plaintiff filed a motion to certify a class of 102 current and former Care Homes employees. The motion sought damages for all of the employees based on plaintiff’s interpretation of subdivision 11(A). The trial court denied the motion, and plaintiff appealed.
In a unanimous decision, the Court of Appeal affirmed the trial court. In the published portion of the opinion, the Court found the language contained in subdivision 11(A) did not control the restrictions contained in subdivision (E). The Court found subdivision 11(E) was a “specific provision” which applied to a discrete class of employers. It was only applicable to employees working for 24-hour residential care facilities and was intended to ensure coverage for patients. Critically, the subdivision expressly permitted employers to “require” employees to work during meal periods.
In contrast, subdivision 11(A) was a “general provision” that allowed employers and employees to “agree” to allow employees to work during meal periods. The language of 11(A) was discretionary rather than obligatory.
The Court found the statutory intent of 11(E) would be meaningless if an employee could revoke the requirement to work through lunch “at any time.” As such, the Court held plaintiff was not entitled to revoke the agreement she made to work during meal periods, and she was not entitled to any additional compensation. In the unpublished portion of the Opinion, the Court also denied plaintiff’s motion for class certification finding that the proposed class did not meet the requirements for class certification.
The Palacio decision is yet another reminder for employers of the importance of documenting employee policies and procedures. Here, Care Homes was able to satisfy its burden in part because it was able to show a standard and uniform policy of requiring its employees to execute written agreements which included an express waiver of the employees’ right to uninterrupted meal breaks. The fact it did not deviate from its policy, enforced it uniformly and explained it to all new employees was remarked upon by the Court. While an employer cannot avoid all issues, it can to some extent insulate itself from potential claims by ensuring that all of its rules, regulations and standards are in writing and enforced evenly and without exception.
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