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The California Court of Appeal this week provided a shield to employers against attacks left open by the state Supreme Court’s momentous decision earlier this month concerning meal and rest periods. The appellate court in Kinecta Alternative Financial Solutions Inc. v. Superior Court (Malone), No. B235491, decided that a trial court in Los Angeles should have dismissed class-action allegations in a meal-and-rest-period lawsuit.

In so doing, the Court of Appeal also relieved the employer from its obligation to produce confidential contact information of other employees who allegedly were not provided meal or rest periods. The appellate court reached those conclusions because the lead plaintiff and her employer had entered an enforceable arbitration agreement that did not contemplate class arbitration.

Of course, employers in the Golden State were relieved on April 12, 2012, when California’s highest court handed down its opinion in Brinker Restaurant Corp. v. Superior Court (Hohnbaum), No. S166350. That case confirmed that employers are not required to ensure their employees take legally mandated breaks; instead, employers only must provide such breaks to their workers. However, in that decision, the Supreme Court did not negate the ability of employees to file class-action lawsuits alleging meal-and-rest-period violations.

The Brinker decision is momentous because it is much easier for employers to show that they provided meal or rest periods than it is to prove that they ensured their workers actually took such breaks. Nonetheless, defending against any class action can be extremely costly and risky, even when an employer has strong evidence that it provided breaks. Avoiding class actions altogether is much more economical.

Accordingly, while the Supreme Court’s decision in Brinker generated much more fanfare, the Court of Appeal’s opinion in Kinecta may be of greater value to employers. Using an enforceable arbitration agreement to negate a class action at the outset can be a lot cheaper than defending a class action regardless of whether the employer has favorable evidence.

With that said, arbitration agreements may not be suitable for every employer. And when such agreements are desirable, care must be taken to ensure that their terms are enforceable. Thus, prudent employers who wish to explore implementing or updating arbitration agreements to reduce their exposure to meal-and-rest-period class actions should consult with legal counsel in light of the Kinecta decision.

As many readers of this Blog know, we’ve been awaiting the California Supreme Court to issue its decision in the Brinker case. This morning it did so. As our attorneys continue to analyze the decision involving issues of employee rest periods and meal breaks, we will be publishing several blog updates in the coming days discussing the impact of the decision on California employers.

In the meantime, we wanted to give you three brief takeaways from today’s decision:

• Meal Period: The Court held that when an employee is entitled to a meal break, an employer’s obligation is to relieve the employee of all work duties during that time but that the employer does not have an obligation to ensure that the employee does no work during the meal period. However, as Justice Werdegar points out in her concurring opinion, the burden remains on the employer to prove that an employee was provided with a meal break. Practically speaking employers will want to have documents and practices in place that demonstrate: (1) a policy of relieving employees of all duty obligations during the meal period; (2) a policy prohibiting any supervisor from encouraging or coercing an employee from working during or through a meal period; and (3) to train supervisors on this standard. Employers may also wish to adopt a policy by which employees should report any meal period denial.

• Rest Period Timing: The Brinker plaintiffs argued that an employer was required to provide at least one rest period before any meal period. Plaintiffs wanted to prevent employers from requiring employees to take an “early lunch”, i.e. requiring a meal break at the beginning of an employee’s shift. The Court rejected plaintiffs’ argument and held that there was no requirement regarding the timing of meal periods vs. rest periods.

• Uniform Policies and Class Actions: The Brinker employee-plaintiffs were subgrouped into three classes for certification: (1) those alleging rest break violations; (2) those alleging meal break violations; and (3) those alleging “off the clock work” violations. The Court held that the first group (rest breaks) should be class certified; the third group (“off the clock”) should not be class certified and that the lower court should reanalyze whether to certify the second group (meal breaks) in light of the Court’s meal break ruling described above. The Court’s ruling suggests that when employees are covered by a uniform policy of the employer, it is more likely that class certification will be granted. Given that there was no uniform policy regarding “off the clock work,” the Court held that it was improper to certify this class of employees since each case of “off the clock work” would have to be decided on a case-by-case basis.

Please follow this Blog for further updates regarding this landmark decision.