Naranjo v. Spectrum Sec. Servs., Inc., 2023 WL 2261253 (Cal. Ct. App. 2023)

After holding that premium payments from meal and rest period violations under Labor Code section 226.7 constituted “wages,” the California Supreme Court remanded to the Court of Appeal to resolve two questions: First, whether in failing to timely pay employees premium pay, the trial court erred in finding the employer had not acted willfully (Section 203 only permits penalties for willful violations). Second, whether there was a “knowing and intentional” violation as required for recovery under section 226. The Court of Appeal affirmed the trial court on the first question because Spectrum’s good faith basis for non-compliance satisfied the willful standard. Specifically, Spectrum’s defenses were not made unreasonably, unsupported by the evidence, or made in bad faith. On the second question, the Court of Appeal held that the good faith basis finding also satisfied the “knowing and intentional” standard.