Cal Supreme Court Rules Time Spent Monitoring Radios During Breaks Constitutes Work

In Augustus v. ABM , the California Supreme Court ruled that requiring security personnel to monitor radios and respond to calls during breaks meant they were not relieved of all duty and therefore still working. The court held, "During required rest periods, employers must relieve their employees of all duties and relinquish any control over how employees spend their break time."

This case was brought under California Labor Code sections and Wage Orders that require California employers to provide 10 minute rest breaks every 4 hours of work where the employees are relieved of all duties.  These authorities also require provision of a meal period which may be unpaid if the employee is "relieved of all duty."  Labor Code § 226.7 provides: “An employer shall not require an employee to work during a meal or rest or recovery period mandated pursuant to an applicable statute, or applicable regulation, standard, or order of the Industrial Welfare Commission.”  Employees are entitled to an hour of pay for violations.

ABM required employees during their breaks to keep their pagers and radio phones on, and remain vigilant and responsive to calls when need arises.   The guards claimed ABM failed to provide bona fide rest periods because they were required to remain on call during their breaks, e.g. on duty.  They were required to monitor their radios and pagers and interrupt their break to respond if a need arose.  The trial court the guards approximately about $90 million. The Court of Appeal reversed, but the Supreme Court reinstated the $90 million judgment. Our Supreme Court reasoned that the guards were still working and thus did not have full personal  use of their break time.  Because rest breaks must be compensated, "when forced to take on-duty rest periods, ―an employee essentially performs . . . '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 [off-duty] rest periods."

While this case was brought by private sector security guards under California Labor Code and Wage Order sections, the Court's determination that time spent monitoring a radio during a break or meal period must be compensated has farther reaching impacts.  For public sector safety employees, this ruling provides strong support that unpaid meal periods where employees are required to monitor their radios violate the Fair Labor Standards Act (FLSA).  Unpaid rest breaks have been long held to violate the FLSA.

CalPERS to Lower Discount Rate to Seven Percent Over the Next Three Years

The California Public Employees' Retirement System (CalPERS) Board of Administration today voted to lower the discount rate from 7.5 percent to 7.0 percent over the next three years.  The discount rate changes approved by the Board for the next three Fiscal Years (FY) are as follows:

FY 2017-2018:     7.375%

FY 2018-2019:     7.25%

FY 2019-2020:     7.00%

Lowering the discount rate, i.e. the assumed rate of return, will result in increases in employers' normal costs and unfunded actuarial liabilities.  

According to CalPERS, the reductions will result in 1-3% rate increases of the normal cost as a percent of payroll for most miscellaneous plans, and 2-5% increases for most safety plans.  PEPRA employees hired after January 1, 2013, will also see their contribution rates rise.