Missing Lunch Breaks Haunt Companies

By AMANDA BRONSTAD

Staff Reporter

When she was a nurse, Sonia Moseley hardly ever took a lunch break. Hospitals were often understaffed and managers discouraged breaks, anyway.

“They would say, ‘The reason you didn’t get your lunch is you didn’t plan your work schedule correctly,'” said Moseley, now executive vice president of the United Nurses Association of California/Union of Health Care Professionals.

Moseley’s union, an affiliate of AFSCME (American Federation of State, County and Municipal Employees), determined that wasn’t an acceptable reason. It sued Tenet Healthcare Corp. on behalf of 5,000 nurses.

The suit is one of dozens filed against employers over California’s labor codes requiring meal and rest periods for hourly paid employees. Lawyers estimate that as many as 100 lawsuits have been filed in just the past six to 12 months, particularly against restaurants, hospitals, retailers and banks.

Companies sued this year include JC Penney Co., United Parcel Service Inc., Hard Rock Caf & #233; International Inc., California Pizza Kitchen Inc., Cheesecake Factory Inc., S.B. Restaurant Co.’s Elephant Bar Restaurant and check-cashing operator Dollar Financial Group Inc.

Defense attorneys fear that the lawsuits may represent a new wave of wage-and-hour claims that dumped multimillion-dollar settlements in past years on national chains, including Sav-On Drug Stores Inc., Starbucks Corp. and Farmer’s Insurance Exchange.

“This is equally threatening to employers,” said Arthur Silbergeld, a partner at Proskauer Rose LLP defending one company against a meal-and-rest-period lawsuit. “It’s expensive litigation. If it’s a class action, you’re talking maybe seven-figure settlements.”

Rules not enforced

Under California’s labor code, hourly paid employees who work more than five hours a day are entitled to a meal break of at least 30 minutes. An employee is also entitled to a rest period of at least 10 minutes for every four hours worked. For an eight-hour shift, employees typically are entitled to two 10-minute breaks.

Those rules, say attorneys, have rarely been enforced.

“The only way you’d get burned is if the Division of Labor Standards Enforcement came in and said you have to give them breaks, and that didn’t happen often,” said Eric Kingsley, a partner at Kingsley & Kingsley PC in Encino who represents workers in at least 12 lawsuits filed this year.

In 2001, however, a new labor code amendment became effective that seeks to penalize employers who violate meal and rest period codes. Under the new code, if an employer fails to provide a meal or rest period, the employer must pay the employee one additional hour of pay for each day of the missed period.

The penalty has provided a financial incentive for lawyers to take on such cases.

“It’s really tough for a law firm to take on a case where there may be a violation but there is absolutely no remedy for a consumer or worker,” said Tracee Lorens, a San Diego attorney who represented Rite Aid Corp. employees who recently settled overtime claims.

Some lawyers sought meal-and-rest period claims in their overtime suits over the past few years. But more recently, separate claims are cropping up.

The penalties can be high, even if the company never gets sued.

Richard Simmons, a partner at Sheppard Mullin Richter & Hampton LLP, said he represents a hospital that paid a self-imposed penalty of $10,000 to $40,000 per pay period to employees who received meal periods late. He said he has one client with potentially $10 million in exposure.

“As minimal as it is, you multiply that by every employee for four years, and it could be a fairly substantial class action,” said Tony Oncidi, a partner at Proskauer Rose. “Unfortunately, many employers are out of compliance when it comes to these issues.”

Take the restaurant industry, said Kingsley, where bartenders, hosts and busboys typically will work six-hour shifts without a break.

He has filed meal-and-rest-period lawsuits against nine restaurants since last December. His first suit, against Hard Rock Caf & #233;’s seven locations in California, is expected to settle in October. He did not say how much the settlement would be, but noted that Hard Rock’s exposure to just the mealtime violations could be $1.5 million.

“Nobody gets breaks in the restaurant industry,” he said. “It’s industry practice. You might be able to get away for a cigarette outside, but, other than that, no breaks are allowed.”

Mixed signals

Retailers and banks are also prime targets, attorneys say. Even white-collar companies, which are less rigid about the breaks taken by secretaries or mailroom workers, may not follow the labor codes by the book, Oncidi said.

Why take the risk?

Cost pressures, especially in light of a down economy, may force some companies to consider bending a few rules, he said. But many employers just find the requirements unrealistic.

“It’s not that you have to give the meal period. You have to give it at the right time,” Simmons said. “If you give a meal period that goes four hours and 59 minutes into the shift, you’re fine. But if it’s at five hours and one minute, it’s illegal.”

Still, plaintiffs have several roadblocks, said Matthew Righetti, a partner at Righetti Wynne PC in San Francisco, who filed dozens of wage-and-hours claims in past years.

Judges in these cases so far have disagreed on whether private attorneys, rather than the California Labor Commissioner, even have the legal right to enforce the penalty. Righetti, who has filed only one meal-and-rest period case so far, said the uncertainty of a judge’s legal interpretation is “a silver bullet for the defense.”

Not all the claims can be certified easily as class actions, either, because they rely on the individual actions of employees and managers who, it could be argued, aren’t reflective of the company as a whole.

Most important, he said, employers usually have a written policy that follows the state’s labor codes. Proving there is an “unspoken” rule to violate those policies relies heavily on whether people come forward and speak out against the company, he said.

Even Moseley, who settled the union’s case against Tenet last month for an undisclosed sum, said the hospital industry’s culture of skipping lunch breaks hasn’t changed that much.

What has changed, she said, are the responses of the hospitals.

“They say they have new evidence there were violations, and they weren’t telling us that before,” Moseley said. “The chance that an employer will correct this has improved.”