A MISSED MEAL PERIOD

Steven Cesare, Ph.D.

A crestfallen business owner from the state of emergency known as California, called me the other day to talk about the recent legal judgment levied against his company, following a three-year lawsuit. While the results of this lawsuit can easily be excused “because it’s California,” the intent of this posting highlights what other business owners in less totalitarian states than California should do to prevent similar impact.

Several years ago, the owner called me about various human resources issues including performance management, compensation, and an employee handbook. Then, the business was doing $15,000,000 in annual revenue, primarily in landscape construction, with 120 employees. During our periodic conversations, the owner spoke about a troublesome field employee who was not working to standard performance, while disseminating negative energy throughout his work crew and the entire field operation.

Naturally, I suggested immediate coaching, ongoing documentation, and preliminary preparation for inevitable termination. The kind-hearted business owner offered additional time for the field employee to improve; improvement which never occurred. Ultimately, the owner reached his limit and terminated the unsatisfactory employee. During the termination meeting, the employee told the owner that he was going to sue the company due to the fact he was deprived of a legally-required meal period several years ago.

A meal period.

From several years ago.

Two weeks later, the business owner received the ominous lawsuit letter from the former field employee’s lawyer. As is standard fare within this type of correspondence, the letter alleged a broad array of legal violations extending well beyond a missed 30-minute period. In particular, the letter included generic claims for missed periods, missed rest breaks, unpaid overtime, unpaid wages, the dreaded PAGA citation, and of course, wrongful termination.

All due to a missed meal period.

From several years ago.

The business owner assured me the company’s timekeeping and payroll records were accurate, that all such accusations were unfounded and would be refuted with ease. True to form, common aftermath from receiving that letter, required the company to allocate extensive staff hours retrieving, photocopying, and sending innumerable timesheets, payroll stubs, and personnel files to the former field employee’s lawyer.

Unbeknownst to the business owner at the time, the former field employee’s lawyer contacted all current company employees and hundreds of former company employees to establish a class action lawsuit. He succeeded. What once started with a single missed meal period by an underperforming field employee, ultimately reached class action status involving 541 plaintiffs, spanning three years of time.

Drum roll…

The formal estimated judgment was $10,200,000. That’s right: $10,200,000. American money.

Rather than contest that estimated penalty, the company negotiated a settlement to pay $650,000.

If the company had a rigorous timekeeping system, coupled with standardized weekly and monthly audits of timesheets, payroll records, and wage and hour regulations, in place at the time, it is extremely likely that the employee’s missed meal period would have been identified, rectified, and finalized that same week.

As a capitalist, I know a company, that you probably know very well, that is simply just too busy to spend routine administrative time verifying the legal compliance of its timekeeping and payroll processes.

I wonder what that company’s field employees had for lunch yesterday?

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