FOR IMMEDIATE RELEASE
IR #07-14
April 16, 2007

CONTACT:
Renée Bacchini
Dean Fryer
(415) 703-5050


CA Supreme Court issues decision in Murphy v. Kenneth Cole regarding meal and rest period

The CA Supreme Court today released a major ruling in the case Murphy v. Kenneth Cole Productions, Inc. finding that the amount paid to a worker by an employer for failing to provide a worker a meal break is considered a wage.

"The Court's decision today provides resolution to one component of the meal period issue, even though the decision is contrary to that of numerous appellate courts, who found the compensation paid by employers for failing to comply with California's meal period regulation is a penalty, not a wage," said Department of Industrial Relations (DIR) acting Director John Rea.

John Paul Murphy, an employee of Kenneth Cole -- an upscale retail clothing store business -- filed a complaint with the Labor Commissioner for missed meal and rest periods, as well as unpaid overtime. Kenneth Cole appealed, raising issues regarding Murphy's workplace classification - that he was a nonexempt employee - and the nature of payments for meal and rest break violations were a penalty rather than a wage.

Statutory changes made in 1999 and 2000 have caused confusion about California's meal period requirement. Hundreds of lawsuits have been filed against businesses of all sizes and from all industries alleging failure to comply with the law.

Of the many issues in dispute regarding the meal period law is whether the amount paid to a worker by an employer for failure to comply with the law is considered a wage earned by the employee or a penalty against the employer. The statute of limitations for a wage is three years, while the statute of limitations for a penalty is one year.

DIR's Division of Labor Standards Enforcement (DLSE) promulgated regulations in 2005 that aimed to resolve this dispute and to describe how to comply. DLSE rescinded its proposed regulations in early 2006, after the Court of Appeals held the payment to be a penalty and it became clear the issue was going to be heard by the Supreme Court.

The Court's decision today provides resolution to one component of the meal period issue. The Labor and Workforce Development Agency, along with DLSE, will continue to work with stakeholders regarding other outstanding meal and rest period issues.

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