By Brandi O. Brown, J.D.
In a case considered twice by the Court of Appeal, with different results, the California Supreme Court has approved the lower court’s second look, agreeing that a wage order of the state’s Industrial Welfare Commission (IWC) allowing healthcare workers to waive second meal periods for shifts over 12 hours long does not violate the state’s Labor Code. The suit was filed by a handful of former hospital employees who claimed the waivers they signed violated the Labor Code and that they were entitled to penalties, unpaid wages, and injunctive relief. Their petition for review was granted and the California Supreme Court affirmed the lower court’s judgment (Gerard v. Orange Coast Memorial Medical Center, December 10, 2018, Liu, G.).
Healthcare workers’ meal period waivers. In 1993, the IWC, at the urging of the health care industry and with employee testimony supporting it, amended its Wage Order 5 by adding section 11(C). That section allowed health care employees who work more than eight hours in a shift to waive a second meal period. In 1999, as part of the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999 (AB 60), the Legislature added sections 512 (setting out statutory meal period requirements), 516 (allowing the IWC to adopt or amend orders with respect to meal periods “notwithstanding any other provision of law” when it was “consistent with the health and welfare of” covered workers), and 517 (allowing the IWC to adopt orders without convening wage boards) to the Labor Code. It also amended section 510 to provide for overtime pay for hours worked in excess of eight hours in one day. Under that section, employees could only waive the second meal period if they worked 12 hours or less.
In 2000, the IWC adopted a new version of Wage Order 5. In it, the newly added section 11(D), like 11(C), permitted health care workers who work more than eight hours to waive a second meal period. After section 11(D) was adopted in 2000, but before it went into effect, the Legislature enacted Senate Bill 88, which required the IWC, when adopting or amending wage orders, to be consistent with section 512.
Employees challenge validity, IWC’s authority. In 2008, the employees filed suit challenging the validity of the second meal period waivers of health care employees working shifts greater than 12 hours. One of the employees alleged claims in the form of a private attorney general action. Two other plaintiffs alleged class claims. The employer asserted an affirmative defense that the waivers signed by the employees conformed to the applicable IWC wage order. It moved for summary judgment and, later, to deny class certification. The trial court granted the motions and the employees appealed.
In Gerard I, the Court of Appeal ruled that such waivers are invalid because newly enacted Section 11(D) violated sections 512 and 516 and it reversed the trial court. In response, the Legislature enacted SB 327, declaring the meal waiver provisions for health care employees in Wage Order No. 5 valid and enforceable and amending Section 512 to reflect that the health care employee meal period waiver provisions of 11(D) were valid and enforceable. The California Supreme Court granted the employer’s petition for review and transferred the matter back to the appellate court, with direction to consider recently enacted legislation. The appeals court changed course and affirmed the trial court rulings in the employer’s favor. The California Supreme Court then granted review.
IWC had authority when it acted. In their appeal the employees argued that the IWC lacked authority when it initially adopted Section 11(D) in 2000, because, under Section 517, IWC wage orders had to be “consistent with” AB 60, including the minimum standards set out in section 512. The high court found their reading of the statutory language “unpersuasive” because it ignored the “broad sweep of the phrase ‘notwithstanding any other provision of law’” that was found in Section 516. It was easy to reconcile the phrases “notwithstanding any other provision of law” and “consistent with this chapter,” found in former Sections 516 and 517, respectively, by giving them their literal meaning. AB 60 may have limited the discretion of the IWC in some respects, but it “explicitly retained” it with regard to the IWC’s “rulemaking prerogative” concerning “break periods, meal periods and days of rest,” so long as the rules were “consistent with the health and welfare” of the affected employees. It was only after adoption of Section 11(D) that the legislature in SB 88 acted to limit the IWC’s discretion regarding meal periods and their consistency with Section 512.
Change in law. The employees also argued that the legislative history of SB 88 supported their position, based on a statement in a Senate analysis that the bill “clarifies” Sections 512 and 516, rather than changes the law. However, noting that the question of whether an amendment represented a change or merely a declaration of existing law was a question of interpretation that belonged to the judiciary, the court added that it was clear that the amendment of former Section 516 “worked a change in the law.” After the amendment the IWC was no longer able to deviate from Section 512’s meal period requirements.
The court also concluded that “SB 88 did not undo Section 11(D) of Wage Order No. 5 permitting health care workers who work more than eight hours to waive a second meal.” Moreover, since 2000, the court noted, the Legislature had amended Section 512 on multiple occasions to exempt certain employees from the second waiver prohibition.
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