The California Supreme Court handed employers a consolation prize this week, holding that an employer does not incur monetary penalties if there is a reasonable, good faith dispute over whether the employer violated the wage statement statute. Naranjo v. Spectrum Sec. Servs., Inc., 2024 WL 1979980 (Cal. May 6, 2024).

One of the employer’s workers in this case filed a putative class action, alleging the employer violated California Labor Code section 226 because it failed to report missed-break meal premiums on employees’ wage statements. Section 226 imposes a penalty of up to $4,000 per employee when an employer commits a “knowing and intentional failure … to comply” with the wage statement law.

The employer countered that even if it did have an obligation to report premium pay owed on employees’ wage statements, this failure was not “knowing and intentional” under Section 226. In fact, until 2022, it remained an unsettled issue whether wage statements needed to include premium pay for missed meal breaks. At that time, this same case reached the California Supreme Court for the first time, and the Court ruled that employers are required to treat missed-break premium pay as wages.  Naranjo v. Spectrum Security Services, Inc., 13 Cal. 5th 93 (2022). You can find our blog post on this prior decision here.

The case made its way back to the California Supreme Court again, this time for the Court to determine whether defendant “knowingly and intentionally” failed to provide employees proper wage statements. California appellate courts had been split on exactly what “knowing and intentional” means in this context. The Court held that if an employer “reasonably and in good faith believed” it provided the proper wage statements, it has not violated Section 226. Previously, some California courts had held that a violation is “knowing and intentional” if the employer is aware of the “factual predicate” underlying the violation — for instance, that it has not reported certain information on an employer’s wage statement, even if “the employer believed in good faith that it had complied with the law.”

The inaccurate wage statements were all issued between June 2004 and September 2007, though the question of whether premium pay had to be recorded on an employee wage statements remained unsettled law until 2022 (the first time this unfortunate employer was before the Court). Thus, the Court held that “[g]iven the uncertainty and confusion, it was not objectively unreasonable for [the employer] to believe [during this period] it had no obligation to report meal premiums as wages. Imposing liability under these circumstances would penalize [the employer] not for failing to apprise itself of its obligations, but for failing to predict how unsettled legal issues would be resolved many years down the line.”

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Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including…

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020; www.jurispub.com), co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.

Photo of Jonathan Slowik Jonathan Slowik

Jonathan Slowik is a special counsel in the Labor Department and a member of the Employment Litigation & Counseling Group.

Photo of David Gobel David Gobel

David R Gobel is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

David Gobel earned his J.D at USC Gould School of Law, where he was a Senior Citations Editor of the USC Journal of

David R Gobel is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

David Gobel earned his J.D at USC Gould School of Law, where he was a Senior Citations Editor of the USC Journal of Interdisciplinary Law, and part of the executive committee of USC’s Music Law Society. Prior to law school, David worked as a research executive for a marketing research firm in New York.