In Rodriguez v. Taco Bell Corp., 896 F.3d 952 (9th Cir. 2018), an employee brought a putative class action alleging that Taco Bell’s discounted meal policy effectively denied employees the ability to take a duty free meal break. At issue in this case was Taco Bell’s policy of offering a discounted meal from the restaurant during the employees’ meal breaks as long as the employees ate the meal on the company’s premises. The ability to purchase discounted meals was voluntary. The policy was implemented to prevent theft. The employees argued that because they were required to remain on the company’s property in order to obtain the discounted meal they employees were not provided a duty free meal break. The court rejected Plaintiff’s argument and held that Taco Bell’s policy complied with California law. Here are five issues California employers should understand about the decision:
1. Meal and rest break requirements
The court in Rodriguez v. Taco Bell explained that California requires non-exempt employees be afforded rest breaks and meal periods after working a certain number of hours. See Cal. Labor Code §§ 226.7, 512. At issue in this case is the Labor Code’s requirement that employees who work more than five hours in a day be afforded a meal period of “not less than 30 minutes” and employees who work more than ten hours in a day must be provided a second meal period of the same duration. Labor Code 512(a). The court also noted that California Industrial Welfare Commission (“IWC”) Wage Order 5-2001 “requires employees be relieved of ‘all duty’ during the meal period. Cal. Code Regs., tit. 8, § 11050, subd. 11(A).”
The court also explained that if a meal or rest break is not provided according to California law, employees are entitled to the remedy of premium wages of “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.” Cal. Labor Code § 226.7(c).
2. Discounted meal policy did not establish control over employees
The court found that Taco Bell’s meal policy was compliant under California law because the company relieved the employees of all duty and relinquished control over their activities. Taco Bell did not require its employees to purchase the discounted meal, there was no evidence that Taco Bell pressured its employees to purchase the discounted meals, employees were free to purchase meals and full price and leave the company premises. In addition, there was no evidence to show that employees were required or pressured to work while on premises during the meal period. In fact, Taco Bell had a policy prohibiting this, “as employees were required to take rest breaks and meal periods away from ‘[t]he food production area’ and ‘[t]he cash register service area.’”
3. Voluntary nature of the discounted meal policy was key issue in case
Plaintiff argued that employers must pay employees whenever they control the employees, even if the employee is not required to work, as set forth in Morillion v. Royal Packing Co., 22 Cal.4th 575 (2000). In Morillion, the employer required employees to travel to work on employer-provided buses, and the employees had no option to drive themselves. There, the court held that employer’s work rules “prohibited employees from using their own transportation to get to and from the fields” where they worked, and therefore this time was considered work time and the employees had to be paid. The court in Taco Bell also noted however that the Morillion court made it clear that if the employer provided optional transportation that the employee was not required to use, the travel time would not need to be compensated. The court in Taco Bell explained that this scenario is more similar to Taco Bell’s voluntary discount meal program.
4. Employers must relieve employees of all duty during breaks
The court in Taco Bell did note that “an employer may so burden the use of employee’s break time that the employees must be considered ‘on duty.’” The court explained:
In Augustus, the employees were required to carry a device so that the employer could reach the employee during the break if services were needed. Augustus, 211 Cal.Rptr.3d 634, 385 P.3d at 832. The California Supreme Court said that such an arrangement was “irreconcilable with employees’ retention of freedom to use rest periods for their own purposes.” Id. In Madera, the employees were not only on call, but were forbidden to conduct any personal business. See Madera, 204 Cal.Rptr. 422, 682 P.2d at 1089.
5. Remember to record meal breaks
Although not an issue in the case, the Wage Orders require that meal breaks taken by the employees must be recorded by the employer. See Wage Order No. 5 (7)(A)(3) (“Meal periods, split shifts intervals and total daily hours worked shall also be recorded.”). The California Supreme Court held in Brinker Restaurant Corp. v. Superior Court that, “[i]f an employer’s records show no meal period for a given shift over five hours, a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided.” Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004, 1053 (2012).
However, there is no similar requirement for employers to record 10-mintute rest breaks.