Mills v. Superior Court

• Decision Date: 27 January 2006
• Docket Number: No. B184760.,B184760.
• Citation: 38 Cal.Rptr.3d 497,135 Cal.App.4th 1547
• Court: California Court of Appeals Court of Appeals
• Parties: Deborah MILLS, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent. Bed, Bath & Beyond Inc., Real Party in Interest.

38 Cal.Rptr.3d 497

135 Cal.App.4th 1547

Deborah MILLS, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent.

Bed, Bath & Beyond Inc., Real Party in Interest.

No. B184760.

Court of Appeal, Second District, Division 5.

January 27, 2006.

Graves & Associates and Allen W. Graves, Los Angeles, for Petitioner.

Thelen Reid & Priest, Thomas E. Hill and David N. Buffington, Los Angeles, for Real Party In Interest Bed, Bath & Beyond Inc.

No appearance on behalf of Respondent.

OPINION

ARMSTRONG, J.

Labor Code section 226.7 provides,

"(a) No employer shall require any employee to work during any meal or rest period mandated by an applicable order of the Industrial Welfare Commission.

(b) If an employer fails to provide an employee a meal period or rest period ... the employer shall pay the employee one additional hour of pay at the employee's regular rate of compensation for each work day that the meal or rest period is not provided."

The issue presented in this case is whether the above language describes a wage due to the employee or a penalty to the employer. We conclude it imposes a penalty on the employer.

FACTS AND PROCEDURAL HISTORY

Petitioner Deborah Mills is an employee of Bed, Bath and Beyond Inc. (BBB). She claims BBB frequently denied her and hundreds of other employees legally required meal and rest breaks. She filed a class action on behalf of herself and the other employees for back wages and penalties, stating causes of action under the Labor Code, applicable California wage orders, and Business and Professions Code section 17200, et seq. In her first, second and third causes of action, Mills asserted that Labor Code section 226.7 required BBB to pay her an additional hour's pay for missed break periods, but that BBB refused to pay.¹ In her fourth, fifth and sixth causes of action, Mills contended that because the money due her under section 226.7 constitutes wages that were not timely paid or properly accounted for in her wage statements, BBB is further liable to her for penalties under the Labor Code.²

BBB demurred to Mill's complaint, arguing in part that any additional payments Mills might be entitled to receive under section 226.7 are penalties, so cannot be recovered separately as wages or support the additional timeliness or wage statement penalties. The trial court agreed with BBB's argument, so sustained its demurrer as to the fourth, fifth and sixth causes of action of the complaint. The demurrer was also sustained as to Mill's seventh cause of action, which alleged the failure to give employee breaks then not pay under section 226.7 constituted an unfair business practice under Business and Professions Code section 17200. Mills filed a petition for writ of mandate seeking to compel the trial court to vacate that portion of its order concluding section 226.7 payments are not wages and sustaining BBB's demurrer.³

DISCUSSION

Section 512 requires employers to provide a 30-minute meal break to employees who work more than 5 hours per day, and a second 30-minute meal break to those working more than 10 hours a day. (§ 512, subd. (a).) A wage order promulgated by the California Industrial Welfare Commission reiterates that requirement, and further requires a 10-minute rest break for every four hours an employee works, or major fraction thereof. (Cal.Code Regs., tit. 8, § 11070, subds. 11, 12.) Should an employer fail to provide those breaks, section 226.7 mandates that "the employer shall pay the employee one additional hour of pay at the employee's regular rate of compensation for each work day that the meal or rest period is not provided." (§ 226.7, subd. (b).) The question posed by this writ proceeding is whether the required payment constitutes a wage or a penalty.

In considering that question, we begin by noting the settled rules of statutory construction. First, we look to the words of the statute itself as the most reliable indicator of legislative intent. (People v. Jefferson (1999) 21 Cal.4th 86, 94, 86 Cal.Rptr.2d 893, 980 P.2d 441.) The words are given their plain and common sense meaning. (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735, 248 Cal.Rptr. 115, 755 P.2d 299.) The meaning of a statute may not be determined from a single word or sentence, but must be construed in context and given a reasonable construction. (Ibid; Webster v. Superior Court (1988) 46 Cal.3d 338, 344, 250 Cal.Rptr. 268, 758 P.2d 596.) However, when the language is ambiguous or susceptible of more than one reasonable interpretation, the court may turn to a variety of extrinsic aids to assist in interpretation, such as the ostensible objects to be achieved by the statute, the evils to be remedied, the legislative history, public policy and the statutory scheme of which the statute is a part. (People v. Jefferson, supra, 21 Cal.4th at p. 94, 86 Cal.Rptr.2d 893, 980 P.2d 441; Granberry v. Islay Investments (1995) 9 Cal.4th 738, 744, 38 Cal.Rptr.2d 650, 889 P.2d 970.)

Applying those principles here, we first find that section 226.7 is ambiguous as to whether the payment it requires constitutes an additional wage or a penalty. At first blush, the statute appears to impose a penalty on an employer who does not provide required breaks. The California Supreme Court has described a penalty as "a sum of money made payable by way of punishment for the nonperformance of an act or the performance of an unlawful act, and which, in the former case, stands in lieu of the act to be performed." (County of San Diego v. Milotz (1956) 46 Cal.2d 761, 766, 300 P.2d 1). Moreover, a penalty is an amount recoverable to satisfy a wrong or injury suffered without reference to actual damage sustained. (County of Los Angeles v. Ballerino (1893) 99 Cal. 593, 596, 34 P. 329; 596, 34 P. 329; see also Prudential Home Mortgage Co. v. Superior Court (1998) 66 Cal.App.4th 1236, 1242, 78 Cal Rptr.2d 566.) As measured by those definitions, section 226.7's requirement that an employer who "fails" to provide mandated break periods must pay a fixed sum of money to the employee, without regard to the actual amount of break time missed, certainly appears to be a penalty rather than a wage. (§ 226.7, subd. (b).)

However, Mills reads section 226.7 as merely requiring additional wages to be paid to an employee who missed break time. Focusing on the words "pay the employee one additional hour of pay," she contends section 226.7 must be interpreted as obligating the employer to compensate the employee for missed break periods. Indeed, citing dictionary references, Mills asserts the word "pay" is itself synonymous with "wage." While we are not convinced that the phrase "pay the employee one additional hour of pay" does anything more than establish the measure of the employer's obligation to remit payment, we accept Mills' reading of section 226.7 as a reasonable, alternative interpretation of the statutory language which describes a wage rather than a penalty. Accordingly, we acknowledge that section 226.7 creates an ambiguity as to the nature of the payment it requires, and turn to evidence outside the statutory language for guidance in discerning its meaning.⁴

Unfortunately for Mills, the legislative history of § 226.7 confirms our initial impression that the required payments were intended to be penalties. Section 226.7 began as Assembly Bill 2509 in the 1999-2000 legislative session. As drafted, the bill provided for penalties of $50 per violation against employers who fail to give meal and rest breaks, and further made them liable to the employee for double pay for the length of the break period in which the employee was required to work. (Assem. Bill No. 2509 (1999-2000 Reg. Sess.) § 12; Assem. Com. on Labor and Employment, Analysis of Assem. Bill No. 2509 (1999-2000 Reg. Sess.) as introduced Feb. 24, 2000, p. 3; Assem. Com. on Appropriations, Analysis of Assem. Bill No. 2509 (1999-2000 Reg. Sess.) as amended Feb. 24, 2000, p. 1; see also Sen. Judiciary Com., Analysis of Assem. Bill No. 2509 (1999-2000 Reg. Sess.) as amended Aug. 7, 2000, pp. 2-3, 16-18.)⁵ Once in the Senate, however, the penalty provisions of the bill were conflated into one payment: the employer would be liable to the employee for one additional hour of wages for the workday, regardless of the amount of break time actually worked. The Senate also eliminated language providing for a private right of action by the employee to recover the additional payment. (Sen. Amend. to Assem. Bill No. 2509 (1999-2000 Reg. Sess.) Aug. 25, 2000, § 7.) Significantly the Legislature noted that "penalty" was the same as the one that had been adopted by the Industrial Welfare Commission to punish employers who failed to give breaks. (Assem. Concurrence in Sen. Amend. to Assem. Bill No. 2509 (1999-2000 Reg. Sess.) as amended Aug. 25, 2000, p. 2.) And, in agreeing to the Senate's change, the Assembly continued to describe the additional payment as a "penalty." (Ibid.) The statute was then enacted as amended by the Senate. In short, though its calculation was changed, to the very end of the legislative process the additional money an employer would have to pay for failing to ensure mandated break periods was considered a penalty.⁶

Indeed, the payment required by section 226.7 is at odds with the definition of wages contained elsewhere in the Labor Code. Section 200 defines wages as "all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation." (§ 200, subd. (a).) Wages have been found to include all forms of compensation provided to an employee in exchange for his or her labor. For example, vested vacation time earned by an employee constitutes wages. (Boothby v. Atlas Mechanical, Inc. (1992) 6 Cal.App.4th 1595, 1600-1601, 8 Cal.Rptr.2d 600.) Bonuses paid to employees may constitute wages. (E.g. Grant-Burton v. Covenant Care, Inc. (2002) 99...