A former server filed an action under the California Labor Code Private Attorneys General Act of 2004 (PAGA), seeking civil penalties on behalf of herself and other “aggrieved employees” for California Labor Code violations, including the failure to reimburse the cost of slip-resistant shoes.  Plaintiff alleged a violation of Labor Code section 2802, which requires an employer to reimburse employees for all necessary expenditures incurred by the employee in direct consequence of the discharge of their duties.

Plaintiff argued that, because the restaurant required employees to wear slip-resistant, black, closed-toes shoes for safety reasons, such shoes should be provided free of cost or employees should be reimbursed for their cost.

The Court of Appeal, persuaded by the reasoning in an unpublished Ninth Circuit Court of Appeals decision, Lemus v. Denny’s, Inc., and guidance from the California’s Division of Labor Standards Enforcement (DLSE), held that section 2802 did not require the restaurant employer to reimburse its employees for the cost of slip-resistant shoes.  Specifically, the Court held that the cost of shoes does not qualify as a “necessary expenditure” under section 2802.

In reaching its decision, the Court followed the reasoning in Lemus, citing a DLSE opinion letter, “The definition and [DLSE] enforcement policy is sufficiently flexible to allow the employer to specify basic wardrobe items which are usual and generally usable in the occupation, such as white shirts, dark pants and black shoes and belts, all of unspecified design, without requiring the employer to furnish such items.  If a required black or white uniform or accessory does not meet the test of being generally usable in the occupation the [employee] may not be required to pay for it.”

Here, the plaintiff did not argue that the slip-resistant shoes were part of a “uniform” or were not usual and generally usable in the restaurant occupation.  The restaurant did not require employees to purchase a specific brand, style, or design of shoes and did not prohibit employees from wearing their shoes outside of work.

Under California law, a restaurant employer must pay for its employees’ work clothing if the clothing is a “uniform” or if the clothing qualifies as certain protective apparel regulated by OSHA or California’s Division of Occupational Safety and Health (Cal/OSHA).  Labor Code and Industrial Welfare Commission Wage Order No. 5-2001, governs the public housekeeping industry, including restaurants.  Under Wage Order No. 5, uniforms must be provided and maintained by the employer when the uniforms are required by the employer to be worn by the employee as a condition of employment.  “Uniform” includes “wearing apparel and accessories of distinctive design or color.”  This section of the wage order specifically does not apply to protective equipment and safety devices regulated by the Occupational Safety and Health Standards Board.

On appeal, the plaintiff abandoned her alternative theory of liability that reimbursement was owed under provisions of Cal/OSHA, Labor Code sections 6401 and 6403, which require employers to furnish and provide safety equipment to employees.

The trial court had held that OSHA and Cal/OSHA provide than an employer is not required to reimburse employees for the cost of non-specialty shoes that offer slip-resistant characteristics, but are otherwise ordinary clothing in nature.  However, the Court of Appeal ultimately did not decide the applicability of OSHA or Cal/OSHA.  Likewise, the Ninth Circuit in Lemus v. Denny’s, Inc. did not address whether Cal/OSHA requires reimbursement of slip-resistant footwear.

After the decision in Townley, there remains a question of whether reimbursement for the cost of slip-resistant shoes could be required under Cal/OSHA for safety reasons.  Under Federal OSHA regulations, employers must generally provide personal protective equipment at no cost to the employee.  The regulation specifically includes an exemption for non-specialty safety-toe protective footwear, which the employer permits to be worn off the job-site.  Employers are also not required to pay for everyday clothing, including street shoes and normal work boots.  Under California law, if protective equipment is required by Cal/OSHA, the employer is responsible for paying for the safety equipment.  There is no Cal/OSHA regulation equivalent to the Federal exemption for generic non-specialty shoes.  While California employers have argued (and the trial court in Townley concluded) that the Federal exemption should control in California, the California Court of Appeal and Ninth Circuit have so far left that question unanswered.

Takeaways

Although we now have clarity that California Labor Code section 2802 does not require reimbursement of the cost of slip-resistant footwear, there remains the question of whether such footwear could constitute reimbursable protective equipment under Cal/OSHA safety standards.  Although Townley and the Federal OSHA exemption provide some guidance for California employers, they are reminded that neither are necessarily binding or precedential.  As such, it will be important for employers to track California caselaw in this area, as well as look out for Cal/OSHA guidance.  In the meantime, employers are encouraged to periodically review their policies and practices for reimbursing employee business expenses to ensure compliance with California law, including Cal/OSHA regulations.

In Rodriguez v. Taco Bell Corp., the United States Court of Appeals for the Ninth Circuit considered whether a restaurant violated California law by requiring employees purchasing meals from the restaurant at a discount to eat their meals on the premises.

In Rodriguez, a restaurant employee filed a class action lawsuit against Taco Bell claiming she was entitled to be paid a premium rate for the time she spent on the employer’s premises eating the discounted meal during her meal breaks. She argued that because the employer required the discounted meal to be eaten in the restaurant, that the employee was under sufficient employer control to render the time compensable.

At the time, the restaurant offered thirty-minute meal breaks that were fully compliant with California requirements, but with an offer that employees could purchase a meal from the restaurant at a discount. The catch? Employees were not required to purchase the discounted meal, but if they chose to they could only get the discount if they ate the meal in the restaurant. The policy was intended to prevent theft.

The court, applying the meal period standard set out by the California Supreme Court in Brinker Restaurant Corp. v. Superior Court, reasoned there was no violation of California law because the employer relieved employees of all duties during meal breaks and exercised no control over their activities. Employees were free to use the thirty minutes as they wanted, and the employer did not interfere with the employees’ use of the break time. Employees were not required to purchase any restaurant products.

The court in Rodriguez distinguished cases where employers exercised control over employees even though they were not performing work by, for example, requiring employees travel to work on employer provided transportation. Where employees were compelled to participate, compensation was required. On the other hand, where employers offered a benefit or service that employees could choose, compensation was not required. The court further distinguished cases where employers exercised control over employees during their breaks by, for example, subjecting them to “on-call” restrictions. In such cases employees were subject to performing duties for their employer during breaks and thus entitled to compensation for such time.

The court also rejected an additional claim by plaintiff that the discounted value of the meal should be added to her regular rate of pay for overtime purposes. Since the court held plaintiff was not entitled to be paid for her time eating the discounted meals, it likewise held she was not entitled to overtime pay for it either.

Background on Meal Periods

In general, non-exempt employees who work more than five hours in a day are entitled to an unpaid meal period of not less than 30 minutes. The meal period must begin no later than the fifth hour of work. Yet, if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.

A second meal period of not less than 30 minutes is required if non-exempt employees work more than ten hours in a day. The meal period must begin no later than the end of the tenth hour of work. If the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and employee only if the first meal period was not waived.

Wage Order 5, which governs meal periods, rest periods and overtime in the restaurant industry, requires employees be relieved of “all duty” during the meal period. The failure to provide a required meal period can be a costly mistake for employers. Employees are entitled to premium wages of one additional hour of pay at the employee’s regular rate of pay for each workday that the meal period is not provided.

Prior to the decision in Brinker, there was uncertainty over what it meant for an employer to provide a meal period. Brinker clarified that an employer is obligated to relieve the employee of all duty for the designated period. Although employers are not required to police employees to ensure no work is performed, employers must relinquish control over employee’s activities, must permit them a reasonable opportunity to take an uninterrupted 30-minute break, and must not impede or discourage them from doing so. In discussing the history of meal periods, the Brinker Court agreed with the Division of Labor Standards Enforcement’s historic interpretation of the wage order that generally employees must be free to leave the premises during their meal period.

Takeaways for Businesses

Rodriguez sanctions a common practice in the restaurant and food service industries to offer employees free or discounted meals eaten on the premises. It remains true that employees not falling within this exception must be permitted to leave the work place for a proper off-duty meal period. The key will be, as it was in Rodriguez, that the employee voluntarily chooses to purchase a discounted meal and the employer does not interfere with the employee’s activities while on break.

This case is a good reminder for businesses to ensure their meal period policy is up to date and that managers are adequately trained to ensure compliance. Care should be taken so that employees are not discouraged from taking their uninterrupted, duty-free meal periods.