Jessica Ferra v. Loews Hollywood Hotel, LLC

Does “regular rate of compensation” for calculating meal

or rest break premium payments mean the same thing as

“regular rate of pay” for calculating overtime premium payments,

and does facially neutral “rounding” of employee work time

systematically undercompensate Jessica Ferra and a class of

employees of Loews Hollywood Hotel, LLC (Loews)? We agree

with the trial court that the phrases have different meanings,

and Loews’s facially neutral rounding policy does not

systematically undercompensate Loews employees.

BACKGROUND

On October 7, 2015, Ferra filed a first amended complaint

against Loews on behalf of herself and three alleged classes of

hourly Loews employees extending as far back as June 26, 2011.

Among other causes of action, Ferra alleged Loews improperly

calculated her premium payment when Loews failed to provide

her with statutorily required meal and/or rest breaks, in violation

of Labor Code section 226.7,1 and Loews underpaid Ferra by

unlawfully “shaving or rounding time from the hours worked

by Ferra.”

The parties stipulated that Ferra worked as a bartender

for Loews from June 16, 2012 to May 12, 2014, and Loews paid



1 Unless otherwise indicated, all subsequent statutory

citations are to the Labor Code.

3

(and continued to pay) meal and rest period premiums to hourly

employees at their base rate of compensation (their hourly wage),

without including an additional amount based on incentive

compensation such as nondiscretionary bonuses. The trial court

ordered that, on those stipulated facts, it would summarily

adjudicate under Code of Civil Procedure section 437c,

subdivision (t) “[w]hether meal and rest period premium

payments paid to employees pursuant to Labor Code § 226.7

must be paid at employees’ ‘regular rate of compensation,’

i.e. their regular hourly wage, or at their ‘regular rate of pay,’ ”

and if it concluded the premium must be at the “regular rate

of pay,” whether section 226.7 was void for vagueness under

the due process clause of the federal Constitution.

After briefing and a hearing, on February 6, 2017, the

trial court issued an order granting the motion for summary

adjudication, concluding: “[T]he terms ‘regular rate of

compensation’ and ‘regular rate of pay’ are not

interchangeable. . . . [R]est and meal period premiums

under § 226.7 need only be paid at the base hourly rate. As is

consistent with the legislative history of §§ 226.7 and 510, it is

apparent that the terms in both statutes are different, and have

different purposes. [¶] . . . [¶] [M]eal and rest period premium

payments paid to employees pursuant to Labor Code § 226.7

must be paid at employees’ ‘regular rate of compensation,’

i.e., their regular hourly wage, and not at their ‘regular rate

of pay.’ ” Loews’s due process claim therefore was moot.

Loews also filed a motion for summary judgment on Ferra’s

remaining causes of action, arguing that Loews’s “rounding”

policy and practice did not result in underpayment of hourly

employees, and any alleged underpayments were de minimis.

4

After briefing and a hearing, on April 24, 2017, the trial court

issued an order granting summary judgment, concluding that

on the undisputed facts, “Loews’s [rounding] policy is neutral

on its face and as applied” and did not “fail[ ] to compensate

the employees for hours worked.” The trial court declined to

address as unnecessary Loews’s alternative argument that

any underpayments were de minimis.

The court granted in full Loews’s motion for summary

judgment. Judgment was entered May 11, 2017, Loews served

notice of entry of judgment on May 19, 2017, and Ferra filed

this timely appeal from the summary adjudication and

summary judgment.

DISCUSSION

If after an independent review of the record and the

applicable law, we agree with the trial court that undisputed

facts show there is no triable issue of material fact and Loews,

as the moving party, was entitled to judgment as a matter of law,

we must affirm the trial court’s grant of summary adjudication

and summary judgment. (Code Civ. Proc., § 437c, subds. (c), (t);

Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860.)

1. “Regular rate of compensation” means the employee’s

base hourly wage

Section 226.7, subdivision (c) states: “If an employer

fails to provide an employee a meal or rest or recovery period

in accordance with a state law. . . , the employer shall pay the

employee one additional hour of pay at the employee’s regular

rate of compensation for each workday that the meal or rest or

recovery period is not provided.” (Italics added.) The Industrial

Welfare Commission (IWC) Wage Order that applies to Loews

and its employees also states that if an employer fails to provide

5

an employee a meal or rest period, “the employer shall pay the

employee one (1) hour of pay at the employee’s regular rate of

compensation for each workday that the [meal or rest] period

is not provided.” (IWC Wage Order No. 5-2001, subds. 11(B),

12(B) (Cal. Code Regs., tit. 8, § 11050, subds. 11(B), 12(B)), italics

added.) This additional hour is a “premium wage.” (Esparza v.

Safeway, Inc. (2019) 36 Cal.App.5th 42, 52.) The wage orders

entitle employees “to an unpaid 30-minute, duty-free meal period

after working for five hours and a paid 10-minute rest period per

four hours of work. (Cal. Code Regs., tit. 8, § 11070, subds. 11,

12.) If denied two paid rest periods in an eight-hour workday,

an employee essentially performs 20 minutes of ‘free’ work, i.e.,

the employee receives the same amount of compensation for

working through the rest periods that the employee would have

received had he or she been permitted to take the rest periods.

An employee forced to forgo his or her meal period similarly

loses a benefit to which the law entitles him or her. While the

employee is paid for the 30 minutes of work, the employee has

been deprived of the right to be free of the employer’s control

during the meal period. [Citations.] Section 226.7 provides

the only compensation for these injuries.” (Murphy v. Kenneth

Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1104) (Murphy).)

Section 510, the statute governing overtime, states in

subdivision (a): “Any work in excess of eight hours in one

workday and any work in excess of 40 hours in any one workweek

and the first eight hours worked on the seventh day of work

in any one workweek shall be compensated at the rate of no

less than one and one-half times the regular rate of pay for an

employee,” and “[a]ny work in excess of 12 hours in one day . . .

[and] any work in excess of eight hours on any seventh day of

6

a workweek shall be compensated at the rate of no less than

twice the regular rate of pay of an employee.” (Italics added.)

The overtime provisions in Wage Order No. 5-2001, subdivision

3(A) mirror the statutory language, stating that overtime work

must be compensated at either one and one-half times or double

“the employee’s regular rate of pay for all hours worked.” (Italics

added.) “[T]he extra amount a worker must be paid, on top

of normal pay, because certain work qualifies as overtime” is

also called a premium. (Alvarado v. Dart Container Corp. of

California (2018) 4 Cal.5th 542, 550.) In the overtime context,

“[s]ignificantly, an employee’s ‘regular rate of pay’ for purposes of

Labor Code section 510 and the IWC wage orders is not the same

as the employee’s straight time rate (i.e., his or her normal hourly

wage rate). Regular rate of pay, which can change from pay

period to pay period, includes adjustments to the straight time

rate, reflecting, among other things, shift differentials and the

per-hour value of any nonhourly compensation the employee

has earned.” (Id. at p. 554.)

California case law does not define the meaning of “regular

rate of compensation” in section 226.7, subdivision (c) and Wage

Order No. 5-2001, subdivisions 11(B) and 12(B), which address

rest and meal periods. The trial court agreed with Loews

that “regular rate of compensation” means the additional hour

premium is calculated as one hour of the employee’s base hourly

wage. On appeal, Ferra argues “regular rate of compensation”

means the same as “regular rate of pay,” so the premium must

be calculated as an additional hour at the employee’s base hourly

wage, plus an additional amount based on her nondiscretionary

quarterly bonus. We agree with the trial court and with Loews,

however, that the statutory terms “regular rate of pay” and

7

“regular rate of compensation” are not synonymous, and the

premium for missed meal and rest periods is the employee’s

base hourly wage.

a. The statutes’ plain language differentiates

“regular rate of compensation” from

“regular rate of pay”

The basic principle of statutory construction is “that

we must look first to the words of the statute, ‘because they

generally provide the most reliable indicator of legislative

intent.’ ” (Murphy, supra, 40 Cal.4th at p. 1103.) We must

“give[ ] significance to every word, phrase, sentence and

part of an act.” (Flowmaster, Inc. v. Superior Court (1993)

16 Cal.App.4th 1019, 1028.) “ ‘Wage orders are quasi-legislative

regulations and are construed in accordance with the ordinary

principles of statutory interpretation.’ ” (Vaquero v. Stoneledge

Furniture, LLC (2017) 9 Cal.App.5th 98, 107.) We should avoid

a construction of the wage order or statute that renders any part

meaningless, inoperative, or superfluous. (Ibid.; Shoemaker v.

Myers (1990) 52 Cal.3d 1, 22.) “[S]tatutes governing conditions

of employment are to be construed broadly in favor of protecting

employees. [Citations.] Only when the statute’s language

is ambiguous or susceptible of more than one reasonable

interpretation, may the court turn to extrinsic aids to assist

in interpretation.” (Murphy, at p. 1103.)2



2 Murphy concluded that the remedy provided in section

226.7 was a premium wage, not a penalty. (Murphy, supra,

40 Cal.4th at p. 1102.)

8

“Where different words or phrases are used in the same

connection in different parts of a statute, it is presumed the

Legislature intended a different meaning.” (Briggs v. Eden

Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1117.)

Ferra argues that the two phrases have the same meaning

because both include the words “regular rate.” Ferra thus urges

us to construe only the phrase “regular rate,” as used in the

Labor Code and the federal Fair Labor Standards Act (FLSA),

29 United States Code section 201 et seq., and to disregard

the additional language because “pay” and “compensation”

are interchangeable.3 But that would render meaningless the

Legislature’s choice to use “of compensation” in one statute and

“of pay” in the other. If the Legislature had intended meal and

rest break premiums to be calculated the same way as overtime

premiums, it would not have used “regular rate of compensation”

when setting premiums for missed meal and rest breaks, and

“regular rate of pay” when setting premiums for overtime work.

We assume the Legislature intended different meanings when

it did not simply use “regular rate,” but added different qualifiers



3 For example, Ferra cites Walling v. Hardwood Co. (1945)

325 U.S. 419, 424, for its use of “regular rate of compensation,”

but, there, the Court construed federal overtime provisions,

and was not quoting statutory language. (See Walling v.

Harnischfeger Corp. (1945) 325 U.S. 427, 430 [same]; Local 246

Util. Workers Un. v. Southern Cal. Edison (9th Cir. 1996) 83 F.3d

292, 295 [same].) Ferra also cites 29 United States Code section

207(e), the federal overtime statute, for its definition of “regular

rate,” and associated federal regulations. Again, these federal

authorities do not answer the question of what “regular rate

of compensation” means in section 226.7.

9

in the statutes and wage orders establishing premiums for

overtime and for missed meal and rest periods.

Ferra also points out that sections 226.7 and 510 were both

enacted in 2000, and both used “regular rate”; but the legislative

decision to add “of compensation” to the first statute, and “of pay”

to the second, works against Ferra’s argument that the words

do not matter, because surely the Legislature meant something

different when it used different language in two statutes enacted

at the same time.

4 “[I]f the Legislature carefully employs a term

in one statute and deletes it from another, it must be presumed

to have acted deliberately.” (Ferguson v. Workers’ Comp.

Appeals Bd. (1995) 33 Cal.App.4th 1613, 1621; see Murphy,

supra, 40 Cal.4th at p. 1108 [“That the Legislature chose to

eliminate penalty language in section 226.7 while retaining the

use of the word in other provisions of [Assem.] Bill No. 2509 is



4 “ ‘Pay’ is defined as ‘money [given] in return for goods

or services rendered.’ (American Heritage Dict. (4th ed. 2000)

p. 1291.)” (Murphy, supra, 40 Cal.4th at p 1104.)

“Compensation” is defined as “[s]omething, such as money, given

or received as payment or reparation, as for a service or loss.”

(American Heritage Dict., supra, at p. 376.) When an employee

misses a meal period or a rest period, he “loses a benefit to which

the law entitles him or her. While the employee is paid for

the 30 minutes of work, the employee has been deprived of the

right to be free of the employer’s control during the meal period.

[Citations.] Section 226.7 provides the only compensation for

these injuries.” (Murphy, at p. 1104.) The “central purpose” of

overtime pay is to pay employees wages for time spent working.

(Id. at p. 1109.) A section 226.7 action, however, is “not an action

brought for nonpayment of wages; it is an action brought for

nonprovision of meal or rest breaks.” (Kirby v. Immoos Fire

Protection, Inc. (2012) 53 Cal.4th 1244, 1257.)

10

further evidence that the Legislature did not intend section 226.7

to constitute a penalty.”])

b. Legislative history does not compel the

conclusion that “regular rate of compensation”

and “regular rate of pay” are synonymous

and interchangeable

Although we do not believe the statutes’ use of different

definitions for the different premiums is ambiguous, we note

that Ferra’s resort to the legislative history does not require us

to conclude that “regular rate of compensation” is the same as

“regular rate of pay.” Ferra acknowledges the legislative history

does not define the two phrases, but points to the regulatory

history of the wage order revisions in which the IWC adopted

the hour premium for rest and meal period violations, quoting

the use in Murphy, supra, 40 Cal.4th 1094, of a commissioner’s

statement at a “June 30, 2000 hearing at which the IWC

adopted the ‘hour of pay’ remedy.” (Id. at pp. 1109-1110.) The

commissioner stated: “ ‘This [meal and rest pay provision applies

to] an employer who says, “You do not get lunch today, you do

not get your rest break, you must work now.” That is—that is

the intent. . . . And, of course, the courts have long construed

overtime as a penalty, in effect, on employers for working people

more than full—you know, that is how it’s been construed,

as more than the—the daily normal workday. It is viewed as

a penalty and a disincentive in order to encourage employers

not to. So, it is in the same authority that we provide overtime

pay that we provide this extra hour of pay.’ ” (Id. at p. 1110.)

While Ferra argues that this means the hour premium for

meal and rest break violations should be calculated like overtime

pay, Murphy used the commissioner’s statement to differentiate

11

the two payments, pointing out that although the IWC used

the word “ ‘penalty’ ” at times to refer to meal and rest period

payments, “the Legislature’s occasional description of the meal

and rest period remedy as a ‘penalty’ in the legislative history

should be informed by the way in which the IWC was using the

word; namely, that like overtime pay, the meal and rest period

remedy has a corollary disincentive aspect in addition to

its central compensatory purpose. [¶] We conclude that the

administrative and legislative history of the statute indicates

that, whatever incidental behavior-shaping purpose section 226.7

serves, the Legislature intended section 226.7 first and foremost

to compensate employees for their injuries.” (Murphy, supra,

40 Cal.4th at pp. 1110-1111, fn. omitted, italics added.) Section

226.7’s “ ‘additional hour of pay’ . . . is a premium wage intended

to compensate employees, not a penalty.” (Murphy, at p. 1114.)5

Murphy recognized that the occasional use of “penalty” in the

legislative history did not require the court to conclude that

section 226.7 was intended to be a penalty, noting that “the

Legislature chose to eliminate penalty language in section 226.7

while retaining the use of the word in other provisions . . . [which]

is further evidence that the Legislature did not intend section

226.7 to constitute a penalty.” (Murphy, at p. 1108.) Here,

the occasional equating of the purpose of providing overtime

premiums with the premiums for missed meal and rest breaks

does not require us to conclude that the premiums must be



5 The court also noted that judicial references to overtime

pay as a “penalty” did not transform overtime pay into a penalty

for the purpose of the statute of limitations. (Murphy, supra,

40 Cal.4th at p. 1109.)

12

calculated identically, especially in light of the Legislature’s

choice to use “regular rate of compensation” in section 226.7

and “regular rate of pay” in section 550.6

It is the Legislature’s choice to use different phrases that

must be construed to mean that the statutes mean different

things. Ferra and amicus California Employment Lawyers

Association point out a few occasions on which the Division of

Labor Standards Enforcement used the phrases interchangeably,

but the Legislature and the statutes did not, and it is the

Legislature’s choice of different descriptions of the premiums

that governs our analysis. While in common parlance “pay”

and “compensation” are sometimes used interchangeably, the

Legislature did not do so in choosing the language of the statutes.

c. Persuasive federal opinions favor construing

the phrases differently

No published California case distinguishes “regular rate

of compensation” as it applies to missed meal and rest periods

from “regular rate of pay” for overtime purposes. We therefore

look to “analytically sound” reasoning in federal opinions,

and “[a]lthough not binding precedent on our court, we may

consider relevant, unpublished federal district court opinions

as persuasive.” (Futrell v. Payday California, Inc. (2010)

190 Cal.App.4th 1419, 1432, fn. 6.)



6 Assembly Bill No. 60 (1999-2000 Reg. Sess.), which

amended the overtime statute, used the phrase “regular rate

of pay” eight times, including in its amendment to section 510

(Stats. 1999, ch. 134), without ever using “regular rate of

compensation”; Assembly Bill No. 2509 (1999-2000 Reg. Sess.)

section 7, which added section 226.7, does not use “regular rate

of pay.”

13

A number of federal district courts have concluded that

the use of “regular rate of compensation” in section 226.7 means

that the premium for missed meal periods must be paid at the

regular rate of compensation (the base hourly rate), rather than

at the regular rate of pay applicable to overtime premiums. In

Bradescu v. Hillstone Restaurant Group, Inc. (C.D.Cal., Sept. 18,

2014, SACV No. 13-1289-GW) 2014 U.S. Dist. Lexis 150978

(Bradescu), the court agreed with the defendant that “payment

of any meal period premium at Plaintiff’s regular rate of

compensation—as opposed to her regular rate of pay—

was appropriate” under section 226.7, subdivision (c), and

Wage Order No. 5-2001, subdivision 11(B). (Bradescu, at *14.)

“[T]here is no authority supporting the view that ‘regular rate

of compensation,’ for purposes of meal period compensation,

is to be interpreted the same way as ‘regular rate of pay’ is for

purposes of overtime compensation. The Court consequently

agrees with [defendant] that the legislature’s choice of different

language is meaningful, in the absence of authority to the

contrary, and therefore rules in [defendant’s] favor on this point.”

(Id. at *22.) In Wert v. United States Bancorp (S.D.Cal., Dec. 18,

2014, No. 13-cv-3130-BAS) 2014 U.S. Dist. Lexis 175735 (Wert),

the court agreed with Bradescu, that the use of different

language in the meal period and overtime statutes was

meaningful: “The plain language of §§ 226.7 and 510 does

not suggest that the phrase[ ] ‘regular rate of compensation’ is

synonymous to and may be used interchangeably with ‘regular

rate of pay.’ ” (Wert, at *10.) In denying the plaintiff’s motion for

reconsideration, the court reiterated: “[T]he legislature’s choice

of different language is meaningful, and . . . the relief under

§ 226.7 is not necessarily or logically the same as the relief under

14

§ 510 insofar as the ‘regular rate’ language is involved.” (Wert v.

U.S. Bancorp (S.D.Cal., June 9, 2015, No. 13-cv-3130-BAS) 2015

U.S. Dist. Lexis 74523, at *7; see Van v. Language Line Services,

Inc. (N.D.Cal., June 6, 2016, No. 14-CV-03791-LHK) 2016 U.S.

Dist. Lexis 73510, at *54.)

Two years later, Brum v. Marketsource, Inc. (E.D.Cal.,

June 19, 2017, No. 2:17-cv-241-JAM-EFB) 2017 U.S. Dist. Lexis

94079 (Brum) agreed with Wert and Bradescu and rejected

the reasoning in Studley v. Alliance Healthcare Services, Inc.

(C.D.Cal., July 26, 2012, SACV No. 10-00067-CJC) 2012

U.S. Dist. Lexis 190964 (Studley, discussed below). Brum

acknowledged the plaintiff’s argument that California

cases have used “regular rate of pay” and “regular rate of

compensation” interchangeably, but pointed out that none of

these cases addresses the difference between the two terms

as they appear in the statutes. (Brum, at *13-14.) More recently,

in Frausto v. Bank of America (N.D.Cal., Aug. 2, 2018, No. 18-cv-

01983-MEJ) 2018 U.S. Dist. Lexis 130220, the plaintiff alleged

that her premiums for missed meal periods “were inadequate

because they were only based on her straight time rate, not her

regular rate of pay that includes all bonuses earned.” (Id. at *12.)

The court cited Bradescu, Brum, and Wert to conclude “there

is no legally tenable argument that section 226.7 payments

should be paid at the ‘regular rate’ used for overtime purposes,”

as section 226.7 “ ‘uses the employee’s rate of compensation.’ ”

(Frausto, at *14.)

As Ferra points out, Studley reached a different result,

reasoning that premiums for missed meal periods were like

overtime pay, and like the overtime statute, section 226.7 used

the term “regular rate.” Studley concluded that “regular rate

15

of compensation” in section 226.7 and “regular rate of pay”

in section 510 should be interpreted the same, because “the

operative word or phrase in each section is not ‘compensation’

or ‘pay’ but rather ‘regular rate,’ ” and the meanings of

“compensation” and “pay” were essentially identical. (Studley,

supra, 2012 U.S. Dist. Lexis 190964, at *14 & fn. 4.)

Two later cases agree. In Ibarra v. Wells Fargo Bank, N.A.

(C.D.Cal., May 8, 2018, CV No. 17-4344-PA) 2018 U.S. Dist. Lexis

78513 (Ibarra), the court declined to compare the language of

section 226.7 to section 510. The employees were mortgage

consultants whose “normal compensation was not comprised

solely or even primarily of pay calculated at an hourly rate,” “the

hourly pay was stated to be only an advance on commissions,”

and the employees “could receive compensation based on

commissions such that the hourly rate was essentially

irrelevant.” (Ibarra, at *7.) Under those circumstances, “[t]he

Court is not persuaded that the ‘regular rate of compensation’

for all class members should be an hourly rate that did not

actually determine the compensation received by most of

the class members.”7 (Id. at *7-8, italics added.) The court

acknowledged the cases finding significant the language “regular

rate of compensation” in section 226.7 and “regular rate of pay”



7 Using the hourly rate to calculate the premiums would

result in class-wide damages of $24,472,114.36, and calculating

the premiums by including all forms of compensation, including

commissions and other nondiscretionary pay, more than

quadrupled the damage award to $97,284,817.91. (Ibarra, supra,

2018 U.S. Dist. Lexis 78513, at *5 & fn. 3.) Ferra does not argue

that Loews’s compensation system would result in similarly

disparate damages.

16

in section 510, but agreed with Studley, that the operative

language in both statutes was “regular rate.” (Ibarra, at *9-10.)

Legislative history did not clearly support either side, and

interpreting section 226.7 to require premiums at more than

the base hourly rate comported with construing the labor laws

in favor of worker protection. (Ibarra, at *12-14.) One recent

district court opinion, Magadia v. Wal-Mart Associates, Inc.

(2019) 384 F.Supp.3d 1058 (Magadia) required Wal-Mart to

factor in a nondiscretionary quarterly bonus in calculating the

“regular rate of compensation” under section 226.7, noting it had

adopted Ibarra’s conclusion that the regular rate of compensation

included the base rate of compensation and other forms of

qualifying compensation. (Magadia, at pp. 1077-1078.)8

Most recently, and just after we heard oral argument in

this case, the court in Valdez v. Fairway Independent Mortgage

Corporation (S.D.Cal., July 26, 2019, No. 18-cv-2748-CAB-KSC)

___ F.Supp.3d ___ [2019 U.S. Dist. Lexis 126013] (Valdez) stated:

“The Court does not agree with the reasoning behind cases

Defendant relies on that find the two terms interchangeable,

as those cases either narrowly construed such a finding to the

specific circumstances of that case or rejected the difference in

language without explanation. [Citations.]” (Id. at *14, citing

Ibarra, supra, 2018 U.S. Dist. Lexis 78513, at *11 and Magadia,

supra, 384 F.Supp.3d at pp. 1077-1078.) “The Court is more

persuaded by the reasoning behind the cases acknowledging the

distinction between the two terms and Plaintiff's assertion that

the overwhelming weight of authority supports the position that



8 Both Ibarra and Magadia have been appealed to the Ninth

Circuit Court of Appeals.

17

‘regular rate of compensation’ is not synonymous with ‘regular

rate of pay.’ [Citations.]” (Valdez, at *14-15, citing Wert, supra,

U.S. Dist. Lexis 175735, at *10-11; Frausto, supra, 2018 U.S.

Dist. Lexis 130220, at *14; Murphy, supra, 40 Cal.4th at p. 1113;

and Brum, supra, 2017 U.S. Dist. Lexis 94079, at *13-14.)

“Having considered both positions, the Court agrees with

Plaintiff's assertion that ‘regular rate of compensation’ is

not equivalent to ‘regular rate of pay’ and likewise finds the

legislature's distinction of the two terms significant.” (Valdez,

at *15.)

We conclude that equating “regular rate of pay” and

“regular rate of compensation” would elide the difference between

requiring an employer to pay overtime for the time an employee

spends working more than 40 hours a week, which pays the

employee for extra work, and requiring an employer to pay

a premium for missed meal and rest hour periods, which

compensates an employee for the loss of a benefit. We agree

with the dissent that the statutes are to be construed in favor

of protecting employees. Requiring employers to compensate

employees with a full extra hour at their base hourly rate for

working through a 30-minute meal period, or for working through

a 10-minute rest break, provides a premium that favors the

protection of employees.

2. Loews’s rounding policy and practice is lawful

Ferra and other Loews hourly employees clocked in

and out of work using an electronic timekeeping system which

automatically rounded time entries either up or down to the

nearest quarter-hour. In addition, the Loews Attendance Policy

stated: “A seven (7) minute grace period, prior to the beginning

of a shift, and a six (6) minute grace period, after the scheduled

18

start time, is incorporated into the timekeeping system and

provides the team member with a degree of flexibility when

clocking in. A team member who clocks in after the (6) six

minute grace period is considered tardy for work.”

“In California, the rule is that an employer is entitled to

use a rounding policy ‘if the rounding policy is fair and neutral

on its face and “it is used in such a manner that it will not result,

over a period of time, in failure to compensate the employees

properly for all the time they have actually worked.” ’ ” (Donohue

v. AMN Services, LLC (2018) 29 Cal.App.5th 1068, 1083, quoting

See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th

889, 907 (See’s).) In this case, Loews’s “policy is neutral on

its face. It ‘rounds all employee time punches to the nearest

quarter-hour without an eye towards whether the employer

or the employee is benefitting from the rounding.’ ” (AHMC

Healthcare, Inc. v. Superior Court (2018) 24 Cal.App.5th 1014,

1027 (AHMC), quoting Corbin v. Time Warner EntertainmentAdvance/Newhouse

Partnership (9th Cir. 2016) 821 F.3d 1069,

1078-1079 (Corbin).) “Employers use rounding policies to

calculate wages efficiently; sometimes, in any given period,

employees come out ahead and sometimes they come out behind,

but the policy is meant to average out in the long-term. If an

employer’s rounding practice does not permit both upward and

downward rounding, then the system is not neutral and ‘will . . .

result, over a period of time, in failure to compensate the

employees properly for all the time they have actually worked.’

[Citation.] Such an arrangement ‘[p]resumably’ does not

‘average[ ] out.’ ” (Corbin, supra, 821 F.3d at p. 1077.) And the

grace period policy means that if the clock shows the employee

19

clocked in before the end of the six-minute grace period, the

employee is not considered tardy.

Although Ferra challenges the accuracy of the data before

the trial court, she also claims the data shows the rounding policy

was not neutral as applied.9 Ferra’s time records showed she lost

time by rounding in 55.1 percent of her shifts, gained time in 22.8

percent, and the remaining shifts were not affected by rounding,

during the relevant time period (June 17, 2012 through April 29,

2014). For a sample group of Loews employees, in 54.6 percent

of shifts paid time was reduced, paid time was added in 26.4

percent of shifts, and the remaining shifts were not affected by

rounding, during the relevant time period (June 2012 through



9 Loews’s expert analyzed data provided to her by Loews

from punch records for Ferra, and for a sample of Loews

employees (sorted by last names). Ferra calls the employee group

“seemingly randomly selected members of the [Loews] work

force.” Ferra claims the data “did not provide evidence of the

number of employees hurt overall by rounding as opposed to the

number benefitted overall by rounding, nor did it break down the

differences between beginning of shift and end of shift rounding.”

Nevertheless, Ferra argues on appeal that the data “clearly

establish that the work force is harmed by rounding” and “proved

systematic under-compensation.” Ferra also used the data in

her first amended complaint to allege that during approximately

50 percent of her and the class’s workweeks, she and the Loews

employees were not paid for all time worked. Her opposition

to the motion for summary judgment relied heavily on the

data (which she included as undisputed facts), and in granting

summary judgment the trial court stated, “Loews’ evidence is

undisputed with respect to how the rounding policy and grace

period actually operated.” We therefore rely on the expert’s

declaration and supporting exhibits.

20

December 2015). The rounding data did not break down the

time gained or lost by employee (except for Ferra, whose time

was analyzed separately).

This is not sufficient to show that the rounding policy

“ ‘systematically undercompensate[s] employees.’ ” (See’s, supra,

210 Cal.App.4th at pp. 901-902.) Although in See’s the majority

of employees were overcompensated, See’s does not “stand[ ]

for the proposition that a rounding policy is unlawful where

a bare majority of employees lose compensation.” (AHMC, supra,

24 Cal.App.5th at p. 1024.) AHMC described two unpublished

federal district court opinions involving quarter-hour rounding

systems which “concluded that the fact that a slight majority

of employees lost time over a defined period was not sufficient

to invalidate an otherwise neutral rounding practice.” (Ibid.)

The first case showed that 53 percent of employees lost time over

a five-year period, and the second showed that 55.8 percent of

employees (including the plaintiff) suffered minor losses

over a three-year period. (Id. at pp. 1025-1026.) Both courts

concluded that summary judgment in favor of the employer

was nevertheless appropriate. (Ibid.) “ ‘[R]ounding contemplates

the possibility that in any given time period, some employees

will have net overcompensation and some will have net

undercompensation. Given the expected fluctuations with

respect to individual employees, shifting the time window even

slightly could flip the figures.’ ” (Id. at p. 1025; Utne v. Home

Depot U.S.A., Inc. (N.D.Cal., Dec. 4, 2017, No. 16-cv-01854-RS)

2017 U.S. Dist. Lexis 199184, at *11-12 (Utne).) “Although the

data analyzed here—from October 22, 2012 to September 1, 2015

—did not average out to 0, Defendant’s expert calculations are

sufficient to establish that the practice does not systematically

21

undercompensate employees over time.” (Boone v. PrimeFlight

Aviation Services, Inc. (E.D.N.Y., Feb. 20, 2018, No. 15-CV-6077-

JMA-ARL) 2018 U.S. Dist. Lexis 28000, at *28.)

We agree with the trial court that Loews’s rounding policy

does not systematically undercompensate its employees over

time.10 As AHMC states, a “fair and neutral” rounding policy

does not require that employees be overcompensated, and

a system can be fair or neutral even where a small majority

loses compensation. (AHMC, supra, 24 Cal.App.5th at p. 1024.)

Ferra did not demonstrate that Loews’s rounding policy

systematically undercompensated employees over time.



10 Like the trial court, we therefore do not address the

de minimis argument Loews made in its motion for summary

judgment. (See Troester v. Starbucks Corp. (2018) 5 Cal.5th 829,

848) [California has not incorporated the de minimis rule in the

FLSA and California de minimis law does not apply to rounding

policy violations].)

22

DISPOSITION

The judgment is affirmed. Costs are awarded to

respondent Loews Hollywood Hotel, LLC.

CERTIFIED FOR PUBLICATION

EGERTON, J.

I concur:

LAVIN, J.

EDMON, P.J., Concurring and Dissenting.

I agree that Loews’s policy of rounding time entries up or

down to the nearest quarter hour is lawful. However, I

respectfully disagree with the majority’s conclusion that “regular

rate of compensation” as used in Labor Code1 section 226.7

means an employee’s base hourly rate. Instead, I would conclude

that “regular rate of compensation” has the same meaning as

“regular rate of pay,” and thus that it includes nondiscretionary

bonuses “[that] are a normal and regular part of [an employee’s]

income.” (Walling v. Harnischfeger Corp. (1945) 325 U.S. 427,

432.

1. Interpretive principles

“In statutory construction cases, our fundamental task is to

ascertain the intent of the lawmakers so as to effectuate the

purpose of the statute. (Day v. City of Fontana (2001) 25 Cal.4th

268, 272.) ‘We begin by examining the statutory language, giving

the words their usual and ordinary meaning.’ (Ibid.; People v.

Lawrence (2000) 24 Cal.4th 219, 230.) If the terms of the statute

are unambiguous, we presume the lawmakers meant what they

said, and the plain meaning of the language governs. (Day v.

City of Fontana, supra, 25 Cal.4th at p. 272; People v. Lawrence,

supra, 24 Cal.4th at pp. 230―231.) If there is ambiguity,

however, we may then look to extrinsic sources, including the

ostensible objects to be achieved and the legislative history. (Day

v. City of Fontana, supra, 25 Cal.4th at p. 272.) In such cases, we

‘ “ ‘select the construction that comports most closely with the

apparent intent of the Legislature, with a view to promoting

rather than defeating the general purpose of the statute, and



1 All subsequent undesignated statutory references are to

the Labor Code.

2

avoid an interpretation that would lead to absurd

consequences.’ ” ’ (Ibid.)” (Estate of Griswold (2001) 25 Cal.4th

904, 910–911.)

Contrary to the majority (maj. opn. ante, at p. 10), I believe

“regular rate of compensation” is ambiguous because it is

susceptible of more than one interpretation. (See Jones v. Lodge

at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1163

[statutory language is ambiguous if it “ ‘permits more than one

reasonable interpretation’ ”].) The plain meaning of

“compensation” is “payment, remuneration,” and the plain

meaning of “regular” is “constituted, conducted, scheduled.”

(Merriam-Webster’s 11th Collegiate Dict. (2008) p. 253, col. 2,

p. 1048, col. 1.) On its face, therefore, “regular rate of

compensation” could mean either an hourly rate plus

incentive/bonus pay or an hourly rate alone. I therefore would

conclude that resort to extrinsic sources and principles of

statutory construction is necessary to determine legislative

intent.

As discussed below, I find three principles of statutory

construction relevant to interpreting section 226.7. First, the

state’s labor laws are to be liberally construed in favor of worker

protection. Second, courts must presume the Legislature was

aware of judicial construction of existing law and intended the

same construction to apply to related laws with identical or

substantially similar language. And third, where statutes use

synonymous words or phrases interchangeably, those words or

phrases should be understood to have the same meaning. Each of

these interpretive principles leads to the same conclusion: that

“regular rate of compensation” and “regular rate of pay” are

3

synonymous, and thus that section 226.7 should be interpreted

consistently with section 510.

2. Liberal construction of labor laws in favor of worker

protection

Our Supreme Court has directed that to determine the

Legislature’s intent in enacting wage and hour legislation, our

analysis must be guided by “[t]wo overarching interpretive

principles.” (Alvarado v. Dart Container Corp. of California

(2018) 4 Cal.5th 542, 561 (Alvarado).) First, the obligation to pay

meal and rest break premiums reflects a state policy that meal

and rest periods are essential to worker health and safety.

(Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th

1094, 1105.) Second, “the state’s labor laws are to be liberally

construed in favor of worker protection.” (Alvarado, supra,

4 Cal.5th at p. 562; see also ZB, N.A. v. Superior Court of San

Diego County (2019) 8 Cal.5th 175, 189 [“Because statutes

governing employment conditions tend to have remedial

purposes, we ‘liberally construe’ them ‘to favor the protection of

employees.’ ”].) Therefore, in deciding whether to factor a

nondiscretionary bonus into an employee’s meal and rest break

premium, “we are obligated to prefer an interpretation that

discourages employers from [depriving employees of meal and

rest breaks], and that favors the protection of the employee’s

interests.” (Alvarado, at p. 562.)

Interpreting “regular rate of compensation” to include

nondiscretionary bonuses unquestionably encourages compliance

with meal and rest break requirements because it raises the cost

to employers of noncompliance. Accordingly, the presumptions in

favor of worker protection and enforcement of meal and rest

4

break requirements weigh strongly in favor of construing section

226.7 consistently with section 510.

3. Consistent construction of similar statutory language

on the same or analogous subjects

“ ‘Where . . . legislation has been judicially construed and a

subsequent statute on the same or an analogous subject uses

identical or substantially similar language, we may presume that

the Legislature intended the same construction, unless a contrary

intent clearly appears.’ (Estate of Griswold[, supra,] 25 Cal.4th

[at pp.] 915–916.)” (Moran v. Murtaugh Miller Meyer & Nelson,

LLP (2007) 40 Cal.4th 780, 785.) In other words, “[w]e presume

the Legislature ‘was aware of existing related laws’ when it

enacted [section 226.7], and that it ‘intended to maintain a

consistent body of rules.’ (People v. Superior Court (Zamudio)

(2000) 23 Cal.4th 183, 199.) We also presume the Legislature

was aware of judicial construction of those laws and that it

intended the same construction to apply to related laws with

identical or substantially similar language. (Moran v. Murtaugh

Miller Meyer & Nelson, LLP (2007) 40 Cal.4th 780, 785.)” (In re

R.G. (2019) 35 Cal.App.5th 141, 146.)

When the Legislature adopted section 226.7 in 2000, it did

so against the backdrop of longstanding federal law that defined

overtime pay in terms of an employee’s “regular rate,” and

existing state law that defined overtime pay in terms of an

employee’s “regular rate of pay.” Both phrases had been

repeatedly construed to include nondiscretionary bonuses and

incentives, in addition to base hourly pay. The historical use of

these terms is essential to understanding the Legislature’s intent

in adopting section 226.7, and thus I summarize that use in some

detail here.

5

a. Historical use of “regular rate” in federal and

state overtime provisions

i. The Fair Labor Standards Act

As adopted in 1938, section 7(a) of the federal Fair Labor

Standards Act (FLSA), 29 U.S.C. section 201 et seq., required

employers to compensate employees for all hours in excess

of 40 at one and one-half times the “ ‘regular rate at which he is

employed.’ ” (149 Madison Ave. Corporation v. Asselta (1947)

331 U.S. 199, 200, fn. 1, italics added.)

The FLSA initially did not define “regular rate,” and

litigation over the meaning of the phrase ensued almost

immediately. In 1944, the Supreme Court held that “ ‘regular

rate’ . . . mean[s] the hourly rate actually paid for the normal,

non-overtime workweek.” (Walling v. Helmerich & Payne, Inc.

1944, 323 U.S. 37, 40, italics added; see also Walling v.

Youngerman-Reynolds Hardwood Co. (1945) 325 U.S. 419, 424–

425, italics added [“The regular rate by its very nature must

reflect all payments which the parties have agreed shall be

received regularly during the workweek, exclusive of overtime

payments. It is not an arbitrary label chosen by the parties; it is

an actual fact”].) The following year, the court held that “regular

rate” necessarily included not only the base hourly rate, but also

nondiscretionary bonuses.2 It explained: “Those who receive



2 The court provided the following example: “An incentive

worker is assigned a basic rate of $1 an hour and works 50 hours

a week on 15 ‘time studied’ jobs that have each been given a

‘price’ of $5. He completes the 15 jobs in the 50 hours. He

receives $50 basic pay plus $25 incentive pay (the difference

between the base pay and 15 job prices). In addition, the worker

receives $5 extra for the 10 overtime hours. This is computed on

6

incentive bonuses in addition to their guaranteed base pay

clearly receive a greater regular rate than the minimum base

rate. . . . The conclusion that only the minimum hourly rate

constitutes the regular rate opens an easy path for evading the

plain design of § 7(a). We cannot sanction such a patent

disregard of statutory duties.” (Walling v. Harnischfeger Corp.,

supra, 325 U.S. at pp. 431―432, italics added.)3

By the 1950’s, Congress had amended FLSA section 7(a) to

include a definition of “regular rate” consistent with that

articulated by the Supreme Court, as follows: “As used in this

section the ‘regular rate’ at which an employee is employed shall



the basis of 50% of the $1 base rate, or 50 cents an hour

premium. Actually, however, this worker receives compensation

during the week at the actual rate of $1.50 an hour ($75 divided

by 50 hours) and the overtime premium should be computed on

that basis, giving the worker a premium of 75 cents an hour or

$7.50 for the 10 overtime hours.” (Walling v. Harnischfeger

Corp., supra, 325 U.S. at p. 431, fn. 3.)

3 In so concluding, the court rejected the employer’s

contention that incentive bonuses were not part of the “regular

rate” because they could not be calculated or paid

contemporaneously. The court explained: “[Employer] also

points to the fact that the incentive bonuses are often not

determined or paid until weeks or even months after the semimonthly

pay-days, due to the nature of the ‘priced’ jobs. But

[FLSA] Section 7(a) does not require the impossible. If the

correct overtime compensation cannot be determined until some

time after the regular pay period the employer is not thereby

excused from making the proper computation and payment.

[FLSA] Section 7(a) requires only that the employees receive a

50% premium as soon as convenient or practicable under the

circumstances.” (Walling v. Harnischfeger Corp., supra, 325 U.S.

at pp. 432–433.)

7

be deemed to include all remuneration for employment paid to, or

on behalf of, the employee.” (See Mitchell v. Adams (5th Cir.

1956) 230 F.2d 527, 532, fn. 10.)

Although the FLSA has been amended many times, the

statute in its current form continues to require overtime pay as a

multiple of an employee’s “regular rate,” and to define “regular

rate” as “all remuneration for employment paid to, or on behalf of,

the employee,” subject to exceptions not relevant here.

(29 U.S.C., § 207, subds. (a)(1), (e), italics added.) Federal courts

interpreting this section have consistently held that “regular

rate” includes, among other things, nondiscretionary bonuses and

incentives. (E.g., Local 246 Utility Workers Union of America v.

Southern California Edison Co. (9th Cir. 1996) 83 F.3d 292

[supplemental payments to disabled workers were part of the

employees’ “regular rate”]; Featsent v. City of Youngstown (6th

Cir. 1995) 70 F.3d 900, 904 [shift differentials and hazardous

duty pay may not be excluded from the “regular rate”]; Reich v.

Interstate Brands Corp. (7th Cir. 1995) 57 F.3d 574, 577 [bonus

must be included in the “regular rate” unless it is entirely

discretionary with the employer].)4



4 Interestingly, federal courts interpreting the FLSA

section 7(a) have frequently described “regular rate” as an

employee’s “regular rate of compensation.” (E.g., Walling v.

Youngerman-Reynolds Hardwood Co., supra, 325 U.S. at p. 424

[“The keystone of § 7(a) is the regular rate of compensation. On

that depends the amount of overtime payments which are

necessary to effectuate the statutory purposes,” italics added];

Walling v. Harnischfeger Corp., supra, 325 U.S. at p. 430 [in

determining whether employer properly calculated overtime pay

under FLSA, “[o]ur attention here is focused upon a

determination of the regular rate of compensation at which the

8

ii. Pre-2000 Wage Orders

In 1913, the California Legislature established the

Industrial Welfare Commission (IWC), to which it delegated

authority for setting minimum wages, maximum hours, and

working conditions. (Augustus v. ABM Security Services, Inc.

(2016) 2 Cal.5th 257, 263 (Augustus).) The IWC began issuing

industry- and occupation-specific wage orders in 1916.5



incentive workers are employed,” italics added]; United States

Department of Labor v. Fire & Safety Investigation Consulting

Services, LLC (4th Cir. 2019) 915 F.3d 277, 280–281 [“To

determine whether [employer’s] payment scheme violated the

FLSA, we must first decide what constitutes the ‘regular rate’ of

compensation actually paid to the Consultants, as that rate

establishes the proper overtime compensation due,” italics

added]; Local 246 Utility Workers Union of America v. Southern

California Edison Co. (9th Cir. 1996) 83 F.3d 292, 295

[“Employees working overtime must be compensated at not less

than one-and-one-half times the regular rate of compensation.

29 U.S.C. § 207(a)(1),” italics added]; Walling v. Garlock Packing

Co. (2d Cir. 1947) 159 F.2d 44, 46 [“It is urged upon us . . . that

there is no relationship between the bonus or premium paid and

the amount produced or the time worked by the employee, and

therefore that the bonus is not part of the regular rate of

compensation. But this argument is not convincing,” italics

added].)

5 The IWC has promulgated 18 wage orders: Twelve of them

cover specific industries, four cover certain occupations, one is a

general minimum wage order, and one applies to industries and

occupations not covered by, and all employees not specifically

exempted in, the wage orders in effect in 1997. (Huntington

Memorial, supra, 131 Cal.App.4th at p. 902.) Although the

Legislature defunded the IWC in 2004, its wage orders remain in

effect. (Mendiola v. CPS Security Solutions, Inc. (2015)

60 Cal.4th 833, 838, fn. 6.) In California, wage orders “are

9

California’s current wage orders are closely modeled after

section 7(a)(1) of the FLSA. (Alcala v. Western Ag Enterprises

(1986) 182 Cal.App.3d 546, 550.) From the early twentieth

century, the IWC’s wage orders required employers to pay

employees premium wages for overtime work (California Grape,

etc. League v. Industrial Welfare Com. (1969) 268 Cal.App.2d 692,

703), and by at least 1968, wage orders defined the overtime

premium with reference to an employee’s “regular rate of pay.”

(See Rivera v. Division of Industrial Welfare (1968) 265

Cal.App.2d 576, 598, fn. 35, italics added [employees could not be

employed “more than eight (8) hours in any one day nor more

than (5) days in any one week unless the employee receives one

and one-half (1½) times her regular rate of pay for all work over

forty (40) hours or the sixth (6th) day”].)

Although the California wage orders added a modifier to

the federal definition—referring to an employee’s “regular rate of

pay,” rather than his or her “regular rate”—California authorities

consistently have concluded the two phrases are synonymous.

Significantly, the Division of Labor Standards Enforcement

(DLSE), the state agency that enforces wage and hour laws

(Ward v. Tilly’s, Inc. (2019) 31 Cal.App.5th 1167, 1176), has said

that “the failure of the IWC to define the term ‘regular rate’

indicates the [IWC’s] intent that in determining what payments

are to be included in or excluded from the calculation of the

regular rate of pay, California will adhere to the standards



constitutionally-authorized, quasi-legislative regulations that

have the force of law.” (Dynamex Operations W. v. Superior Court

(2018) 4 Cal.5th 903, 914, fn. 3, citing Cal. Const., art. XIV, § 1;

§§ 1173, 1178, 1178.5, 1182, 1185; Industrial Welfare Com. v.

Superior Court (1980) 27 Cal.3d 690, 700―703.)

10

adopted by the U.S. Department of Labor to the extent that those

standards are consistent with California law.” (Dept. of

Industrial Relations, DLSE, Chief Counsel H. Thomas Cadell, Jr.,

Opn. Letter No. 2001-01-29, Calculation of Regular Rate of Pay

(Jan. 29, 2003) p. 2, fn. 1.) And, as specifically relevant in the

present case, the DLSE has drawn on federal authorities to

conclude that “regular rate of pay,” like “regular rate,” includes

nondiscretionary bonuses and incentives. (Dept. of Industrial

Relations, DLSE, Chief Counsel H. Thomas Cadell, Jr., Opn.

Letter No. 1991-03-06, Calculation of Regular Rate of Pay (Mar.

6, 1991) p. 1; see also Huntington Memorial Hospital v. Superior

Court (2005) 131 Cal.App.4th 893, 902―903 (Huntington

Memorial) [citing advice letter].)6



6 In a March 1991 opinion letter, the DLSE considered

whether “sporadic incentive bonus payments made to employees

for the performance of work ancillary to their primary duties”

were part of the “regular rate of pay” for purposes of determining

overtime pay. The DLSE responded that the “answer, under both

federal and California law, is, yes.” It explained: “The

enforcement of the California overtime requirements follow[s]

federal precedent where applicable and where the federal

precedent is patterned on language which is similar in intent to

the California law. . . . [¶] Bonus payments, with certain

exceptions [fn. omitted], are included in the calculation of

overtime. Bonuses based on incentive must be calculated into the

employee’s wages to determine the ‘regular rate of pay.’ ” (Dept.

of Industrial Relations, DLSE, Chief Counsel H. Thomas Cadell,

Jr., Opn. Letter No. 1991-03-06, Calculation of Regular Rate of

Pay (Mar. 6, 1991) p. 1; see also Huntington Memorial, supra, 131

Cal.App.4th at pp. 902―903 [citing opinion letter].) The DLSE

similarly opined several years later, advising that “as with

federal law,” a bonus based on a piece rate “must be figured into

11

b. Current law

i. Wage Order 5-2001

The IWC adopted wage orders in their current forms in

2000. Consistent with prior versions, Wage Order No. 5-2001,

which governs the present case (see Brinker Restaurant Corp. v.

Superior Court (2012) 53 Cal.4th 1004, 1018), provides that an

employer is obligated to pay an overtime premium for work in

excess of eight hours in a day, 40 hours in a week, or for any work

at all on a seventh consecutive day. (Wage Order No. 5-2001,

subd. 3, Cal. Code Regs., tit. 8, § 11050, subd. 3(A)(1).) Such

work must be compensated at 1.5 times the employee’s “regular

rate of pay,” or double the “regular rate of pay” if the employee

works in excess of 12 hours in a day or in excess of eight hours on

a seventh consecutive working day. (Cal. Code Regs., tit. 8,

§ 11050, subd. 3(A)(1)(b).)

Wage Order 5-2001 also included, for the first time, a

provision requiring premium pay for employees deprived of the

ten-minute rest breaks or 30-minute meal breaks required by

statute. Specifically, Wage Order No. 5-2001 provides that an

employer who does not allow an employee a rest period or meal

period “shall pay the employee one (1) hour of pay at the

employee’s regular rate of compensation” for each workday the

rest period or meal period is not provided. (Cal. Code Regs.,

tit. 8, § 11050, subds. 11(B), 12(B), italics added.)

Although the IWC thus used slightly different language to

describe the premiums due for overtime work and for missed



the formula for determining the ‘regular rate of pay.’ ” (Dept. of

Industrial Relations, DLSE, Chief Counsel H. Thomas Cadell, Jr.,

Opn. Letter No. 1994-06-17, Regular Rate of Pay (June 17, 1994)

p. 2.)

12

meal and rest breaks (“regular rate of pay” versus “regular rate of

compensation”), nothing in the regulatory history suggests the

IWC intended the two phrases to have different meanings.

Indeed, the regulatory history suggests exactly the opposite. In

its explanation of the basis for adopting meal and rest break

premiums, the IWC said: “During its review . . . , the IWC heard

testimony and received correspondence regarding the lack of

employer compliance with the meal and rest period requirements

of its wage orders. The IWC therefore added a provision to this

section that requires an employer to pay an employee one

additional hour of pay at the employee’s regular rate of pay for

each work day that a meal period is not provided.” (IWC

Statement As to the Basis, p. 20, italics added,

[as of Oct. 9,

2019], archived at .) In other

words, the IWC itself appears not to have distinguished between

the phrases “regular rate of pay” and “regular rate of

compensation”—a telling indicator that it intended these phrases

to be applied interchangeably.

ii. Sections 510 and 226.7

At about the same time the IWC enacted wage orders in

their current forms, the Legislature added provisions governing

overtime premiums and meal and rest break premiums to the

Labor Code by adopting sections 510 and 226.7. Like the

analogous provisions of the wage orders, section 510 requires

overtime pay to be calculated on the basis of an employee’s

“regular rate of pay,” and section 226.7 requires meal and rest

break premiums to be calculated on the basis of an employee’s

13

“regular rate of compensation.”7 Section 510 does not define

“regular rate of pay,” and section 226.7 does not define “regular

rate of compensation.”

Nothing in the legislative history of these enactments

suggests that the Legislature intended “regular rate of pay,” as

used in section 510, and “regular rate of compensation,” as used

in section 226.7, to have different meanings. To the contrary, the

legislative committee reports describe the proposed meal and rest

break premiums—which in every version of the bill were based

on an employee’s “regular rate of compensation”

8—in terms of



7 Section 510, subdivision (a) provides: “Any work in excess

of eight hours in one workday and any work in excess of 40 hours

in any one workweek and the first eight hours worked on the

seventh day of work in any one workweek shall be compensated

at the rate of no less than one and one-half times the regular rate

of pay for an employee. Any work in excess of 12 hours in one

day shall be compensated at the rate of no less than twice the

regular rate of pay for an employee. In addition, any work in

excess of eight hours on any seventh day of a workweek shall be

compensated at the rate of no less than twice the regular rate of

pay of an employee.”

Section 226.7, subdivision (c) provides: “If an employer

fails to provide an employee a meal or rest or recovery period in

accordance with a state law, including, but not limited to, an

applicable statute or applicable regulation, standard, or order of

the Industrial Welfare Commission, the Occupational Safety and

Health Standards Board, or the Division of Occupational Safety

and Health, the employer shall pay the employee one additional

hour of pay at the employee’s regular rate of compensation for

each workday that the meal or rest or recovery period is not

provided.”

8 See, e.g., Senate Amendment to Assembly Bill No. 2509

(1999―2000 Reg. Sess.) June 26, 2000, section 12; Senate

14

rates of pay or wages. For example, the Senate Committee on

Industrial Relations described an early version of the bill as

requiring employers to pay an amount “twice the hourly rate of

pay” (Sen. Com. on Industrial Relations, Analysis of Assem. Bill

No. 2509 (1999―2000 Reg. Sess.) as amended June 26, 2000, p. 5,

italics added); the Senate Judiciary Committee described the bill

as creating employer liability for “twice the employee’s average

hourly pay” (Sen. Com. on Judiciary, Analysis of Assem. Bill No.

2509 (1999―2000 Reg. Sess.) as amended Aug. 7, 2000, p. 8,

italics added); and the Senate Rules Committee said failure to

provide meal and rest periods would subject an employer to

paying a worker an additional “hour of wages” (Sen. Com. on

Rules, Analysis of Assem. Bill No. 2509 (1999―2000 Reg. Sess.)

as amended Aug. 25, 2000, p. 4, italics added). Similarly, the

legislative reports describing the overtime pay provisions of

section 510 refer in places to an employee’s rate of

“compensation.” (E.g., Bill Analysis, Assem. Bill No. 60

(1999―2000 Reg. Sess.) as amended July 1, 1999, p. 3, italics

added [under existing law, wage orders require “the payment of

time-and-one-half compensation for work exceeding eight hours

per day, 40 hours per week”]; Sen. Com. on Industrial Relations,

Analysis of Assem. Bill No. 60 (1999―2000 Reg. Sess.) as

amended May 27, 1999 [same].)



Amendment to Assembly Bill No. 2509 (1999―2000 Reg. Sess.)

August 7, 2000, section 10; Senate Amendment to Assembly Bill

No. 2509 (1999―2000 Reg. Sess.) August 25, 2000, section 7.

15

iii. Judicial interpretations of section 510

Like the DLSE, state courts have drawn on federal

authorities interpreting the FLSA to inform their understanding

of “regular rate of pay” within the meaning of the wage orders

and section 510. (E.g., Kao v. Holiday (2017) 12 Cal.App.5th 947,

960, fn. 5 [“California adheres to federal standards for calculating

the regular rate of pay to the extent those standards are

consistent with state law”]; Huntington Memorial, supra, 131

Cal.App.4th at p. 903 [“federal authorities . . . provide useful

guidance in applying” section 510]; Advanced-Tech Security

Services v. Superior Court (2008) 163 Cal.App.4th 700, 707

[adopting federal definition of “regular rate” for purposes of

determining that “regular rate of pay” does not include premium

holiday pay: “ ‘Our Supreme Court has “frequently referred to

such federal precedent in interpreting parallel language in state

labor legislation” ’ ”]; Alcala v. Western Ag Enterprises (1986)

182 Cal.App.3d 546, 550, fn. omitted [“California’s wage orders

are closely modeled after (although they do not duplicate), section

7(a)(1) of the Fair Labor Standards Act of 1938. (29 U.S.C. § 207

(a)(1).) It has been held that when California’s laws are

patterned on federal statutes, federal cases construing those

federal statutes may be looked to for persuasive guidance.”].)

Last year, our Supreme Court concluded that, like an

employee’s “regular rate” for purposes of the FLSA, an employee’s

“regular rate of pay” for purposes of section 510 “is not the same

as the employee’s straight time rate (i.e., his or her normal hourly

wage rate).” (Alvarado, supra, 4 Cal.5th at p. 554, italics added.)

Instead, the “[r]egular rate of pay, which can change from pay

period to pay period, includes adjustments to the straight time

rate, reflecting, among other things, shift differentials and the

16

per-hour value of any nonhourly compensation the employee has

earned.” (Ibid.)

c. Analysis

When the Legislature adopted section 226.7 in 2000, it for

the first time required employers to pay a premium to employees

who were not permitted to take statutory meal and rest breaks.

But while the premium pay requirement was new, the statutory

language used to describe it was not. Instead, as I have

described, in adopting section 226.7 the Legislature used a

phrase—“regular rate”—that long had been part of the labor law

lexicon, and which had, through many years of judicial

interpretation, become a term of art. The Legislature did so,

moreover, without indicating an intention to deviate from the

well-understood meaning of “regular rate.” Under these

circumstances, I believe the Legislature’s use of “regular rate”

indicates its intent that meal and rest break premiums should be

calculated on the basis of an employee’s base hourly rate plus

bonuses—i.e., the employee’s “regular rate”—not the base hourly

rate alone.

It is undoubtedly true, as the majority notes, that section

226.7 uses a modifier (“of compensation”) that does not appear in

federal or state overtime provisions, and further that established

rules of statutory construction suggest that courts should attempt

to give meaning to every word in a statute to avoid rendering

language surplusage. (E.g., Berkeley Hillside Preservation v.

City of Berkeley (2015) 60 Cal.4th 1086, 1097 [courts should avoid

“interpretations that render any language surplusage”].) But

although a construction that renders part of a statute surplusage

generally should be avoided, “ ‘this rule is not absolute and “the

rule against surplusage will be applied only if it results in a

17

reasonable reading of the legislation” [citation].’ (Park Medical

Pharmacy v. San Diego Orthopedic Associates Medical Group,

Inc. (2002) 99 Cal.App.4th 247, 254, fn. 5; see Sturgeon v. County

of Los Angeles (2015) 242 Cal.App.4th 1437, 1448 [‘[T]he canon

against surplusage is not absolute.’].)” (MCI Communications

Services, Inc. v. California Dept. of Tax & Fee Administration

(2018) 28 Cal.App.5th 635, 650.)

Here, attributing controlling significance to the modifier “of

compensation” leads to an entirely unreasonable conclusion—

namely, that the Legislature used the phrase “regular rate” in

section 226.7 without intending the meaning “regular rate” had

acquired over the course of more than 60 years. To paraphrase

our Supreme Court, I find it “ ‘highly unlikely that the

Legislature would make such a significant change [in the

meaning of “regular rate”] without so much as a passing

reference to what it was doing. The Legislature “does not, one

might say, hide elephants in mouseholes.” ’ ” (Jones v. Lodge at

Torrey Pines Partnership, supra, 42 Cal.4th at p. 1171.)

I find the majority’s analysis particularly unpersuasive in

light of the nearly simultaneous enactment of sections 510 and

226.7. Reduced to its essentials, the majority’s reasoning is as

follows. In 1999, “regular rate” was widely understood to mean

base hourly rate plus bonuses. Although the Legislature modified

the federal language when it adopted section 510, the Legislature

intended “regular rate of pay” to have the same meaning as

“regular rate.” But although the Legislature modified the federal

language in a similar (although not identical) manner when it

adopted section 226.7, it intended an entirely different

meaning—and although it nowhere articulated that intended

meaning, it expected parties and the courts to infer the meaning

18

by its use of the word “compensation,” rather than “pay.” I am

not persuaded.

The majority urges that the Legislature’s use of “regular

rate” in section 226.7 was not a departure from established law

because it added a qualifier—“of compensation”—that does not

appear in the FLSA. While it is true that “of compensation” is

not present in the FLSA, neither is “of pay.” Nonetheless, our

Supreme Court has held that, like “regular rate,” “regular rate of

pay” “includes adjustments to straight time rate, reflecting,

among other things, shift differentials and the per-hour value of

any nonhourly compensation the employee has earned.”

(Alvarado, supra, 4 Cal.5th at p. 554.) I would reach the same

conclusion with regard to “regular rate of compensation.”

4. The Labor Code uses “pay” and “compensation”

interchangeably

Although courts sometimes attach significance to the

Legislature’s use of different words or phrases in related statutes,

where statutes appear to use synonymous words or phrases

interchangeably, courts have not hesitated to attribute the same

meanings to them. (See, e.g., People v. Frahs (2018)

27 Cal.App.5th 784, 793, fn. 3, review granted Dec. 27, 2018,

S252220 [defendant “attempts to draw a distinction between

‘deadly weapon’ and ‘instrument,’ but the terms are used

interchangeably within the statute”]; Vector Resources, Inc. v.

Baker (2015) 237 Cal.App.4th 46, 55 [“The italicized words in

Labor Code section 1773 show that the terms ‘determine’ and ‘fix’

are used interchangeably and have the same meaning in the

statute”]; Alcala v. City of Corcoran (2007) 147 Cal.App.4th 666,

672 [attributing same meaning to statute’s use of “public agency”

and “public entity”: “Unless the two terms are read

19

interchangeably, the statute makes no sense”]; International

Assn. of Fire Fighters Union v. City of Pleasanton (1976)

56 Cal.App.3d 959, 976 [“We perceive no basis for distinguishing

between the term ‘consultation in good faith,’ as used in

[Government Code] section 3507, and the ‘meet and confer in

good faith’ process defined in [Government Code] section 3505”];

Midstate Theatres, Inc. v. County of Stanislaus (1976) 55

Cal.App.3d 864, 872 [“Applicants argue that the statute uses the

words [advise and represent] interchangeably and that in popular

usage no valid distinction can be drawn between them. There is

merit in this contention”]; see also People v. Johnson (2015)

61 Cal.4th 674, 692 [“Because ‘term’ and ‘sentence’ have been

used interchangeably, and ‘term’ clearly has more than one

meaning in the statute, we cannot be confident that ‘sentence’

has a consistent meaning throughout the statute. In any event,

the presumption that a term has an identical meaning

throughout a statute ‘is rebuttable if there are contrary

indications of legislative intent.’ ”].)

As the Supreme Court has noted, the Legislature “has

frequently used the words ‘pay’ or ‘compensation’ in the Labor

Code as synonyms.” (Murphy v. Kenneth Cole Productions, Inc.,

supra, 40 Cal.4th at pp. 1103―1104 & fn. 6.) This is not

surprising, as “pay” and “compensation” are synonymous as a

matter of common parlance. Webster’s dictionary defines

“compensation” as “payment, remuneration” (Merriam-Webster’s

11th Collegiate Dict. (2008) p. 253, col. 1), and it defines “pay” as

“something paid for a purpose and esp. as a salary or wage;

remuneration” (id., p. 910, col. 2). “Pay,” “compensate,” and

“remunerate” are identified as synonyms. (Id. at p. 910, col. 2.)

20

The Legislature’s interchangeable use of “pay” and

“compensation” is evident throughout the Labor Code generally,

as well in those provisions of the Labor Code that describe

overtime and meal and rest break premiums specifically. For

example, with regard to meal and rest breaks, section 226.7

requires an employer to “pay” an employee deprived of a meal or

rest break for an additional hour at the employee’s “regular rate

of compensation.” (§ 226.7, subd. (c), italics added.) The very

next section sets out a limited alternative to this requirement for

nonexempt employees holding safety-sensitive positions at a

petroleum facility—namely, that if such an employee is required

to interrupt his or her rest period to address an emergency, an

additional rest period shall be provided or the employer shall pay

the employee “one hour of pay at the employee’s regular rate of

pay.” (§ 226.75, subd. (b), italics added.) Had the Legislature

intended the meal and rest break premium for employees at

petroleum facilities to be calculated differently than other meal

and rest break premiums, it presumably would have said so

explicitly.

Similarly, with regard to overtime, section 510 provides

that employees who work more than eight hours per day shall be

“compensated” at the rate of one and one-half times “the regular

rate of pay.” (§ 510, subd. (a), italics added.) The sections that

immediately follow provide that in some circumstances

employees may work alternative workweek schedules (four 10-

hour days) without being entitled to “payment . . . of an overtime

rate of compensation,” and that the IWC “may establish

exemptions from the requirement that an overtime rate of

compensation be paid” for certain categories of employees.

(§§ 511, subd. (a), 515, subd. (a), italics added.) And, section

21

204.3 provides that, as an alternative to overtime pay, an

employee may receive compensating time off at a rate either of

not less than one and one-half hours for each hour of employment

for which overtime compensation is required or, if an hour of

employment “would otherwise be compensable at a rate of more

than one and one-half times the employee’s regular rate of

compensation, then the employee may receive compensating time

off commensurate with the higher rate.” (§ 204.3, subd. (a); see

also § 751.8, subds. (a)―(b), italics added [smelters and other

underground workers may work more than eight hours in a 24-

hour period “if the employee is paid at the overtime rate of pay for

hours worked in excess of that employee’s regularly scheduled

shift,” but all work performed in any workday in excess of the

scheduled hours established by an agreement in excess of

40 hours in a workweek shall be compensated “at one and onehalf

times the employee’s regular rate of compensation”].)

In short, the Legislature uses “pay” and “compensation”

interchangeably throughout the Labor Code, including in

provisions that describe the overtime and meal and rest break

premiums. I would conclude, therefore, that the principle that

the same meaning should be attributed to substantially similar

language in related statutes (Moran v. Murtaugh Miller Meyer &

Nelson, LLP, supra, 40 Cal.4th at p. 785) supports the conclusion

that the Legislature intended “regular rate of compensation” to

have the same meaning as “regular rate” and “regular rate of

pay.”

5. The majority’s reliance on a single canon of

construction is unpersuasive

The majority’s conclusion that “regular rate of

compensation” means an employee’s base hourly rate is grounded

22

almost entirely on a single canon of statutory construction—that

“ ‘[w]here different words or phrases are used in the same

connection in different parts of a statute, it is presumed the

Legislature intended a different meaning.’ ” (Maj. opn. ante, at p.

8, citing Briggs v. Eden Council for Hope & Opportunity (1991) 19

Cal.4th 1106, 1117.) But while canons of statutory construction

are intended to “provide guidance in interpreting a statute,” they

are “ ‘ “ ‘merely aids to ascertaining probable legislative intent.’

[Citation.] No single canon of statutory construction is an

infallible guide to correct interpretation in all circumstances.”

“[The canons] are tools to assist in interpretation, not the formula

that always determines it.” ’ ” (City of Palo Alto v. Public

Employment Relations Bd. (2016) 5 Cal.App.5th 1271, 1294; see

also Stone v. Superior Court (1982) 31 Cal.3d 503, 521, fn. 10

[principles of construction “are merely aids to ascertaining

probable legislative intent.”].) Accordingly, a court must “ ‘ “be

careful lest invocation of a canon cause it to lose sight of its

objective to ascertain the Legislature’s intent.” ’ ” (People v.

Superior Court (Cooper) (2003) 114 Cal.App.4th 713, 720.)

In the present case, I believe the majority’s reliance on a

single canon of construction has led it to a conclusion the

Legislature did not intend, and that the canon does not support.

As a logical matter, if the canon applies, it may suggest what

section 226.7 does not mean, but it cannot give insight into what

the statute does mean. In other words, if the canon applies, it

might suggest that “regular rate of compensation” does not mean

the same thing as “regular rate of pay”—but it does not lead

23

logically to the conclusion that “regular rate of compensation”

means straight hourly rate.9

The majority’s analysis assumes that when the Legislature adopted sections 226.7 and 510, it intended parties and the courts to understand—in the absence of any clarifying language in the statute or legislative history—that “regular rate of pay” has the same meaning as “regular rate,” but “regular rate of compensation” means something different. I cannot conclude that Indeed, because elsewhere the Labor Code refers to an hourly wage as “straight time” or “base hourly rate,” a consistent application of the interpretive principle on which the majority relies would lead to the conclusion that “regular rate of compensation” cannot mean a straight hourly rate. (E.g., § 1773.1, italics added [per diem wages: “Credits for employer payments also shall not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing.”]; § 1773.8, italics added [“An increased employer payment contribution that results in a lower taxable wage shall not be considered a violation of the applicable prevailing wage determination so long as all of the following conditions are met: . . . (b) The increased employer payment and hourly straight time and overtime wage combined are no less than the general prevailing rate of per diem wages.”]; § 204.11, italics added [“For any employee who is licensed pursuant to the Barbering and Cosmetology Act . . . , wages that are paid to that employee for providing services for which such a license is required, when paid as a percentage or a flat sum portion of the sums paid to the employer by the client recipient of such service, and for selling goods, constitute commissions, provided that the employee is paid, in every pay period in which hours are worked, a regular base hourly rate of at least two times the state minimum wage

rate.”].) the Legislature “would have silently, or at best obscurely, decided

so important . . . a public policy matter and created a significant departure from the existing law.” (In re Christian S. (1994) 7 Cal.4th 768, 782.) Instead, I would conclude that when the Legislature used the phrase “regular rate” in section 226.7, it intended the phrase to mean what it has always meant: guaranteed hourly wages plus “bonuses [that] are a normal and regular part of [an employee’s] income.” (Walling v. Harnischfeger Corp., supra, 325 U.S. at p. 432.)