Again ruling in accord with “our general guidance that the ‘state’s labor laws are to be liberally construed in favor of worker protection,’ ” the Supreme Court in Ferra v. Loews Hollywood Hotel, LLC today agrees with an employee’s interpretation of a statute providing extra pay for missed mandatory meal or rest breaks. The court also rejects an employer’s argument that the interpretation should be applied prospectively only.
The statute requires “one additional hour of pay at the employee’s regular rate of compensation” and the point of contention is whether the “regular rate of compensation” is only an employee’s hourly wage or whether it also includes other nondiscretionary amounts, such as, in the Ferra case, quarterly nondiscretionary incentive payments. The court’s unanimous opinion — by Justice Goodwin Liu and heavy on legislative history — holds it’s the latter, applying what the court says is the accepted meaning that is given to the term “regular rate of pay” in a statute governing mandatory overtime pay.
Under a contrary interpretation, the court says, “employers would be incentivized to minimize employees’ base hourly rates and shift pay elsewhere.”
The court also concludes its decision is retroactive. Among other things, it brushes aside the defendant’s claim that retroactivity exposes employers to “millions” in liability: “it is not clear why we should favor the interest of employers in avoiding ‘millions’ in liability over the interest of employees in obtaining the ‘millions’ owed to them under the law.”
The court reverses a 2-1 decision of the Second District, Division Three, Court of Appeal, which had concluded “regular rate of compensation” and “regular rate of pay” are not synonymous. (Today’s opinion extensively quotes the Court of Appeal dissent.) It also finds unconvincing several federal district court rulings.
[July 16 update: Did the Supreme Court answer a $72,000,000+ question yesterday?]
