close

For more than four decades, Fenwick & West LLP has helped some of the world’s most recognized companies become, and remain, market leaders. From emerging enterprises to large public corporations, our clients are leaders in the technology, life sciences and cleantech sectors and are fundamentally changing the world through rapid innovation.  MORE >

Fenwick & West was founded in 1972 in the heart of Silicon Valley—before “Silicon Valley” existed—by four visionary lawyers who left a top-tier New York law firm to pursue their shared belief that technology would revolutionize the business world and to pioneer the legal work for those technological innovations. In order to be most effective, they decided they needed to move to a location close to primary research and technology development. These four attorneys opened their first office in downtown Palo Alto, and Fenwick became one of the first technology law firms in the world.  MORE >

From our founding in 1972, Fenwick has been committed to promoting diversity and inclusion both within our firm and throughout the legal profession. For almost four decades, the firm has actively promoted an open and inclusive work environment and committed significant resources towards improving our diversity efforts at every level.  MORE >

At Fenwick, we are proud of our commitment to the community and to our culture of making a difference in the lives of individuals and organizations in the communities where we live and work. We recognize that providing legal services is not only an essential part of our professional responsibility, but also an excellent opportunity for our attorneys to gain valuable practical experience, learn new areas of the law and contribute to the community.  MORE >

Year after year, Fenwick & West is honored for excellence in the legal profession. Many of our attorneys are recognized as leaders in their respective fields, and our Corporate, Tax, Litigation and Intellectual Property Practice Groups consistently receive top national and international rankings, including:

  • Named Technology Group of the Year by Law360
  • Ranked #1 in the Americas for number of technology deals in 2015 by Mergermarket
  • Nearly 20 percent of Fenwick partners are ranked by Chambers
  • Consistently ranked among the top 10 law firms in the U.S. for diversity
  • Recognized as having top mentoring and pro bono programs by Euromoney

MORE >

We take sustainability very seriously at Fenwick. Like many of our clients, we are adopting policies that reduce consumption and waste, and improve efficiency. By using technologies developed by a number of our cleantech clients, we are at the forefront of implementing sustainable policies and practices that minimize environmental impact. In fact, Fenwick has earned recognition in several areas as one of the top US law firms for implementing sustainable business practices.  MORE >

At Fenwick, we have a passion for excellence and innovation that mirrors our client base. Our firm is making revolutionary changes to the practice of law through substantial investments in proprietary technology tools and processes—allowing us to deliver best-in-class legal services more effectively.   MORE >

Mountain View Office
Silicon Valley Center
801 California Street
Mountain View, CA 94041
650.988.8500

San Francisco Office
555 California Street
13th Floor
San Francisco, CA 94104
415.875.2300

Seattle Office
1191 Second Avenue
10th Floor
Seattle, WA 98101
206.389.4510

New York Office
1211 Avenue of the Americas
32nd Floor
New York, NY 10036
212.921.2001

Shanghai Office
Unit 908, 9/F, Kerry Parkside Office
No. 1155 Fang Dian Road
Pudong New Area, Shanghai 201204
P.R. China
+86 21 8017 1200


Employment Law Alert: Payment for Missed Meal and Rest Periods Is a 'Wage' Subject to Three-Year Statute of Limitations

California Supreme Court Rules that Payment for Missed Meal and Rest Periods is a "Wage" Subject to Three-Year Statute of Limitations

In a unanimous decision, the California Supreme Court held that the hour of pay to which non-exempt employees are entitled when they are denied a meal or rest period constitutes a wage, not a penalty. The legal significance for employers is that a claim to recover Labor Code penalties is subject to a one year statute of limitations, while a wage claim is subject to a three year statute of limitations. As a result, employers that fail to provide employees with meal and/or rest periods now face exposure for unpaid wages for up to three years prior to the filing of a claim.

California Labor Code section 226.7 provides that "no employer shall require any employee to work during any meal or rest period mandated by an applicable [wage order]." Further, if an employer fails to provide such meal periods, "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. In Murphy v. Kenneth Cole Productions, Inc., the California Supreme Court resolved a controversial conflict among lower state courts of appeal, two of which held that the additional hour of pay under section 226.7 constitutes a penalty, while one held that it is a wage. http://www.fenwick.com/publications/6.5.4.asp?mid=5

Plaintiff John Murphy was a manager in the San Francisco store of Kenneth Cole, a nationwide clothier. Murphy initially filed an administrative complaint with the California Department of Labor Standards Enforcement ("DLSE") alleging he was misclassified as an exempt employee and thereby denied overtime. The DLSE agreed, and awarded Murphy overtime.

Kenneth Cole appealed the DLSE ruling to the San Francisco County Superior Court, and in response, Murphy tacked on a claim to recover payment under section 226.7 for missed meal and rest periods. The superior court ruled in Murphy's favor, finding that Kenneth Cole misclassified Murphy as exempt and thus owed him unpaid overtime as well as one hour of pay for each missed meal and rest period. Kenneth Cole then appealed to a state court of appeal, which reversed the superior court's section 226.7 award. The court of appeal held that the 226.7 remedy was a penalty, subject to a one year statute of limitations, and concluded that Murphy's 226.7 claim was barred because he did not assert it before the expiration of the statute of limitations. On April 16, 2007, the California Supreme Court reversed.

The Supreme Court initially found that the text of section 226.7 is ambiguous, and reasonably susceptible to either interpretation advanced by the litigants. The Court then examined the legislative history of 226.7, together with the language of and legislative intent behind related Labor Code provisions. The Court then concluded that 226.7 imparts a dual purpose–to shape employer conduct and to compensate employees–and that the statute is primarily intended to compensate employees, not punish employers. The Court also observed that other Labor Code provisions specifically refer to the term "penalty" in connection with amounts employers must pay when they fail to comply with various wage obligations (for example, Labor Code section 226.3 imposes a "civil penalty" against employers that fail to issue itemized statements to employees for each pay period). Conversely, section 226.7 does not refer to the term "penalty" in describing the additional hour of pay.

The Court also rejected the argument that the additional hour of pay should be construed as a penalty because it is imposed without reference to actual damage (since an hour of pay is owed regardless of whether the employee missed a 30-minute meal period or two 10-minute rest periods). Finally, the Court observed that the a three year statute of limitations would not impose an undue evidentiary burden on employers during litigation because employers are required to keep all time records (including records of meal periods), for a minimum of three years.

This decision not only significantly increases employers' potential exposure for meal and rest period violations, but it is also a sobering reminder to employers to ensure that their exempt employees are properly classified. Proper classification will insulate employers from exposure for unpaid overtime as well as Labor Code section 226.7 "wages."


This Fenwick Employment Brief is intended by Fenwick & West LLP to summarize recent developments in employment and labor law. It is not intended, and should not be regarded, as legal advice. Readers who have particular questions about employment and labor law issues should seek advice of counsel.

©2007 Fenwick & West LLP. All Rights Reserved.