The California Wage Orders generally provide that an employee who works more than three and one-half hours is entitled to a paid 10-minute rest period. (8 Cal. Code Regs., § 11040, subd. 12(A).) If an employer fails to provide a paid rest period in accordance with California law, the employee is entitled to recover a premium wage equal to one hour of pay: “If an employer fails to provide an employee a meal or rest or recovery period in accordance with a state law, including, but not limited to, an applicable statute or applicable regulation, standard, or order of the Industrial Welfare Commission…, the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided.” (Lab. Code, § 226.7, subd. (c).)
Rest period claims often occur for employees paid on a commission-only basis. “[Commission-based] compensation plans must separately account and pay for rest periods to comply with California law.” (Vaquero v. Stoneledge Furniture LLC (2017) 9 Cal.App.5th 98, 117 (Vaquero).) This means that the employer must separately pay for rest period time in addition to any commissions paid. If the employer does not separately pay for rest periods, the employee is entitled to the one hour of pay penalty set forth in Labor Code section 226.7.
For a worker paid only commissions, the “one additional hour of pay” is calculated by dividing the employee’s total earnings by the total hours worked. (Ibarra v. Wells Fargo Bank, N.A. (C.D. Cal., May 8, 2018, No. CV 17-4344 PA (ASX)) 2018 WL 2146380, at *2-6 (Ibarra).) An employee who recovers the “one additional hour of pay” for a rest period violation is entitled to an award of interest at the rate of seven percent per annum. (Naranjo v. Spectrum Security Services, Inc. (2019) 40 Cal.App.5th 444, 476.)
An employer cannot ignore rest period laws or argue that they can avoid liability because rest period laws are too “technical.” (See Ibarra, supra,2018 WL 2146380, at *6 [“Defendant’s violation of section 226.7 is not a mere “technical violation” as Defendant suggests … but instead relates to an important component of the Labor Law.”]; Vaquero, supra, 9 Cal.App.5th at p. 113 [“[T]he Legislature views the right to a rest period as so sacrosanct that it is unwaivable. Compensation plans that do not compensate employees directly for rest periods undermine this protective policy by discouraging employees from taking rest breaks.” (citations omitted)].)