McDonald’s recently agreed to pay $26 million to settle allegations that it had violated California’s wage and hour laws. The case was pending for 7 years and involved a class of 38,000 cooks and cashiers working at corporate-owned locations throughout California. McDonald’s always denied any violations of the California Labor Code, but McDonald’s nonetheless finally agreed to pay $26 million to make the case go away.
Overnight Shifts Not Counted Properly for Overtime Purposes
The McDonald’s case was originally brought in 2013 and alleged wage theft going back to 2009 at corporate-owned McDonald’s locations in California. One of the allegations involved the way McDonald’s allocated and paid overnight shifts. California law requires that, when an employee works more than 8 hours in any 24-hour period, she must be paid overtime for the excess hours. The plaintiffs alleged that, when an employee worked a shift from 8 p.m. to 2 a.m., then worked another shift from 2 p.m. to 8 p.m. the next day, McDonald’s allocated 100% of the first shift’s hours on the day the shift began. According to the plaintiffs, by allocating shifts as it did, McDonald’s failed to pay overtime that employees were owed.
Improper Meal and Rest Breaks
Another allegation was that McDonald’s regularly failed to provide employees with proper or full meal and rest breaks. Plaintiffs alleged that when the restaurants were busy, McDonald’s required employees to take their lunch breaks or rest breaks at the beginning or end of their shifts instead of during their shift.
Failure to Pay Uniform Expenses
McDonald’s was also accused of violating provisions of California’s expense reimbursement law, codified at California Labor Code Section 2802, which requires employers to reimburse workers for “all necessary expenditures or losses incurred by the employee” in the course of the job as well as for expenses incurred at the employer’s directive. The lawsuit alleged that McDonald’s required employees to clean and iron their uniforms without any pay or reimbursement, thus violating Labor Code Section 2802.
The Terms of the Deal
As part of the $26 million settlement, McDonald’s agreed to pay a one-hour wage premium to all employees denied a full meal period or proper rest periods during their shifts, and further agreed to allow employees to leave during meal and rest breaks and to maintain electronic time records to accurately track the duration of employee meal periods. McDonald’s also agreed that it would stop requiring workers to take rest breaks at the beginning or end of a shift, and to provide new uniforms at no cost to employees when their uniforms become too worn or damaged by grease and smoke from the kitchen area. The settlement also requires McDonald’s to train employees and management about the changes.
What Should Employers Do?
California’s wage and hour laws are complicated. Failing to understand or follow all of California’s complex wage and hour laws can bring catastrophic consequences to California employers. An ounce of prevention is worth a pound of cure, so we always recommend that employers (1) read and know the Wage Order that applies to their industry or occupation, (2) keep their wage/hour/pay policies and employee handbooks compliant through regular review and updating by their employment counsel, and (3) for larger companies with more complex operations, conduct regular wage/hour/pay audits led by experienced employment counsel.