Labor Code section 203 imposes a “waiting time” penalty of one day’s wages for each day that former employees are not paid their final wages due when they stop working. For many years, employment lawyers assumed that any unpaid wages would trigger waiting time penalties, including premium wages for missed meal and rest breaks. But in Naranjo v. Spectrum Security Services (September 26, 2019), the Court of Appeal held otherwise.
In Naranjo, a class of security guards won a judgment for unpaid meal period premium pay under Labor Code section 226.7. The trial court also awarded waiting time penalties since these meal premiums were not paid at the time their employment ended. The defendant appealed the award of waiting time penalties and the appellate court reversed:
In other words, meal period premiums are earned by working without the required break – not by an employee’s labor. Accordingly, they are not “wages” under Labor Code section 203.
This is a fairly recent decision and still might be overruled by the state Supreme Court. But if it stands, it will be interesting to see how the reasoning would apply in other contexts. For example, the Labor Commissioner has traditionally applied Section 203 to unpaid overtime premium wages. For now, it remains to be seen whether waiting time penalties will continue to apply for the failure to pay overtime.