Tuesday, April 17, 2012

California Supreme Court Decides Meal Period Rules

In Brinker Restaurant Corp. v. Super. Ct. (April 12, 2012) 2012 WL 1216356, the California Supreme Court found it is the employer's obligation to relieve its employee of all duty, with the employee thereafter at liberty to use the meal period for whatever purpose the employee desires. The employer need not, howeer, ensure that no work is done.

The lawsuit was filed by five non-exempt restaurant employees of Chili’s who claimed the restaurant illegally denied them meal and rest breaks. The employees challenged the restaurant’s practice of having employees take early lunches shortly after starting work and then working employees another five to ten additional hours without receiving another meal period. The employees also claimed they should have received a rest break before the first meal period.

The Court found an employer’s obligation to "provide" a meal period is satisfied if the employee (1) is relieved of all duty for an uninterrupted thirty minute period, and (2) is free to leave the work premises. The employer's obligation is to "relieve the employee of all duty," with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires. The employer need not "ensure" that no work is done during a meal period. If an employer relieves the employee of all duty, the employer is not liable for a meal period premium if the employee chooses to work (unless the employee is pressured by the employer to work). However, if the employer knew or reasonably should have known that the employee was working during the meal period, the employer will be liable for payment of the employee's regular (or overtime) wage for such time worked. The Court further found Rest breaks and meal periods do not need to be taken in a certain order.

Thursday, April 12, 2012


The California Supreme Court in Howell v. Hamilton Meats & Provisions, Inc. held that an injured party is not entitled to recover the reasonable value of medical services provided as damages in a lawsuit when the injured party was responsible enough to maintain private health insurance coverage. The Court opined that such an injured party’s medical damages are limited to the significantly lower sum paid by the healthcare insurer pursuant to its contract with the medical providers. The Court explained that the reduction in compensation for medical services based on a negotiated rate differential is not a benefit provided to the plaintiff in compensation for his or her injuries.

The decision skewed the civil justice system in favor of liability insurers and defendants by leaving prevailing plaintiffs with a smaller recovery and insurance companies with lower liability damages. Defendants are no longer liable for the total cost of a plaintiff’s medical bill, but rather the substantially discounted negotiated rates that are paid for by medical insurance companies.
The Court’s decision penalizes the injured plaintiff whose foresight and prudence resulted in maintaining private health insurance by creating disparate values of medical treatment for plaintiffs with health insurance and those without health insurance.

Plaintiffs with medical insurance are entitled to only what is paid by their medical insurance carrier; however, plaintiffs with no insurance are entitled to recover the entire reasonable value for identical medical treatment. The uninsured plaintiff is entitled to such a recovery even when the hospital reduces the costs of non-insured plaintiffs’ bills. In Sanchez v. Strickland, the California Court of Appeals held that when a hospital willingly reduces the bill without the insurance carrier being involved it is a benefit that may be recovered by the plaintiff under the collateral source rule. As a result, Howell puts insured plaintiffs in a worse position than those plaintiffs who do not carry medical insurance.

Bob Tyson, who argued for the defendants before the California Supreme Court, argues that letting plaintiff’s recover the full bill is a “super windfall.” Generally a windfall is defined as receipt of financial gain that was not expected and not the result of something the recipient did. Finding a $100 bill on the street is a windfall. In contrast, a marketplace gain by freely negotiating parties is not a windfall. It’s anticipated, planned, and paid for with plaintiffs’ medical insurance premiums. This “windfall” rhetoric, which has a negative connotation, has been used effectively by defense attorneys throughout the nation to limit the scope of the collateral source rule.

On February 24, 2012, California Senate President Pro Tem Darrel Steinberg brought a glimpse of hope when he introduced Senate Bill 1528 (“SB 1528”). The Bill seeks to add Section 3284 to the California Civil Code, which would effectively overturn last year’s California Supreme Court decision in Howell. The Bill would eliminate the cap set by the Court in Howell and instead allow plaintiffs with medical insurance to recover the reasonable cost of the medical services provided to the plaintiff without regard to the amount that was actually paid for the services.

Look out for a major battle this year over SB 1528!