What is California’s “Premium Pay”?

Many California employers do not understand their legal obligation to pay “premium pay.” An employer’s failure to understand the obligation to pay “premium pay” when owed to an employee, can result in costly litigation pursuant to California’s Private Attorney General Act (“PAGA”).  California Labor Code section 226.7 provides that:  “(a) No employer shall require an employee to work during any meal or rest period mandated by an applicable order of the Industrial Welfare Commission. (b) If an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the Industrial Welfare Commission, the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.”

So what exactly is “premium pay”? In general, “premium pay” is extra pay, at an employee’s regular rate of pay, that is owed to an hourly (non-exempt) employee when the employee fails to take a rest or meal period by the required time, due to action by the employer.

Examples of what could trigger “premium pay” include, but are not limited to:

    1. Employer asks employee to perform work which interrupts the 30 minute meal period.
    2. Employer asks employee to take a delayed meal period, specifically to delay the meal period so it is taken 2 hours past the 5th hour of an employee’s shift;
    3. Employee clocks back in before the 30 minute meal period is up because her supervisor asked her to report back to work.
    4. Supervisor asks employee to skip a rest break as Company operations are too busy and the employee is needed at her work station.

The penalty for the above examples in which the employee did not take the meal or rest break as required is “premium pay.” The payment of “premium pay” is as follows:

    One extra hour of pay at the employee’s regular rate for either a missed meal period or missed break; the maximum penalty is two premium pays for each work day. These hours are not used in the calculation of overtime or double time nor will these hours be considered hours worked.

YourVirtualHR can assist with any questions that employers may have on this important topic. Just give us a call!

Minimum Wage Resource

Employers must ensure that employee minimum wages comply with applicable FEDERAL, STATE OR LOCAL ORDINANCES. Of course, whichever law/local ordinance provides the greatest benefit to the employee will apply. We found a site that employers and their payroll administrators might find helpful in complying with these federal and state laws, and local ordinances.

Minimum Wage Tracker – Economic Policy Institute