Over the past several years there has been a good deal of attention paid to meal and rest break obligations under California law. Just when employers thought it was safe to exhale (perhaps during a rest break?), the California Supreme Court’s opinion in Augustus v. ABM Security Services, Inc., No. S224853 (Dec. 22, 2016), appears to have imposed a heightened standard for employer compliance in “single operator” workplace environments. Following Augustus, employers that require employees to remain on-call during rest breaks (even if they are not interrupted or called back to work) will be deemed as not having afforded those employees a valid break.

The Decision

The Augustus plaintiffs filed a putative class action against ABM on behalf of the Company’s security guards, claiming that ABM failed to properly provide rest breaks. Plaintiffs argued that ABM policy required security guards to keep pagers and radios on during rest breaks, respond when necessary (such as escorting tenants to parking lots, notifying building managers of mechanical issues and responding to emergency circumstances), and to remain vigilant. The trial court granted plaintiffs’ motion for summary judgment on the underlying issue as well as on damages, awarding approximately $90 million in statutory damages, penalties and interest. After the Court of Appeal reversed, the California Supreme Court granted review to consider the Court of Appeal’s decision.

The ABM security guards were governed by IWC Wage Order 4 (which regulates wages, hours and working conditions for professional, technical, clerical, mechanical and similar occupations). This Wage Order applies to a great many categories of employees, so the Augustus decision reaches far beyond the security industry. In evaluating the plaintiffs’ claims in the context of California Labor Code Section 226.7 (which establishes the meal and rest break rules), the Supreme Court considered two issues: (1) whether California law requires employers to proactively authorize off-duty rest periods; and (2) whether requiring employees to remain on-call satisfies an employer’s rest break obligation. As to the first question, the Court held that employers must “permit and authorize” employees to take off-duty rest periods, meaning employees must be relieved of their job duties and the employer must relinquish control over the way employees spend their time during rest breaks. As to the second issue, the Court held that on-call rest periods do not relieve an employee of job-related duties or employer control. Accordingly, the Supreme Court reversed the decision of the Court of Appeal and agreed with the guards that requiring them to “remain vigilant” did not empower them to take a true rest break.

How Will This Decision Impact Your Business?

The Supreme Court’s ruling is significant for at least three reasons. First, it limits employer flexibility in administering rest periods. Augustus likely invalidates many company policies that require employees to maintain possession of company radios or cell phones during rest breaks or to respond to phone calls or e-mails during that time. Second, the number of rest break lawsuits, including class actions, will likely increase. Third, based on the Court’s rationale, employees will likely cite the opinion to show a likelihood of success at litigation if they can demonstrate the employer requires them to potentially respond to work-related issues during a rest break. Given the language in Augustus, this will be the case even if employees do not actually perform any work-related duties during the majority of their breaks.

How Can You Manage the Risk and Alleviate the Burden?

Despite imposing stringent requirements, the Court offered three ways to alleviate the burdens of relieving employees of all duties, including on-call duties, as follows:

1. Provide employees with another rest break to replace an interrupted break;

2. Pay the one-hour premium payment required for a noncompliant rest break;

3. Request from the Division of Labor Standards Enforcement that it be exempt from the obligation to provide duty-free rest breaks.

It is worth noting, however, that while the Court offered these alternatives, the opinion also warned that replacing rest breaks and/or paying the penalty should be exceptions rather than a rule, hinting that a suit for failure to comply with the statutory obligations still might lie even where the employer had mitigated all damages by providing new breaks or paying the applicable premiums.

In light of the significant impact of the decision, employers should carefully examine their rest period policies and “on-call” practices related to paid or unpaid break time. Even if a policy is facially compliant with California law, actual practices for administering rest breaks can lead to liability if the employee is not truly afforded the opportunity to be relieved of all work-related obligations.