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In a decision issued this week, the Ninth Circuit upheld a District Court decision in favor of employer Taco Bell—holding that its meal policy requiring employees to stay on site during meal periods when employees purchased a discounted meal was lawful.

In that case, Plaintiffs, individually and as class representatives, challenged Taco Bell’s meal policy, which provided that employees could take an off-duty meal period in accordance with the applicable Wage Order, but that employees could also choose to purchase a discounted meal so long as the employee ate the meal in the restaurant. The policy was enacted to prevent employees from purchasing food for friends and family at the discounted rate and taking it home.

Plaintiffs sued, saying that meal periods where employees purchased discounted meals were “on-duty” because employees were required to eat discounted meals at the restaurant, and employees were subject to the control of employer and should have been paid for the meal period and entitled to a one-hour meal period premium at the regular rate of pay for each workday that the meal period was not provided and other derivative claims. Taco Bell argued that the on-premises condition did not make the employees meal period “on-duty,” because purchase of the discounted meal is entirely voluntary and employees were free to spend their meal period time however they wanted. Plaintiffs countered that even if employees were not working, because they were under the employer’s control the time counted as “hours worked.”

The Court agreed with Taco Bell, holding that because an employee is not required to purchase a discounted meal, and employees were free to leave the premises or spend their meal period time in whatever way they chose, the meal period was not “on duty” and not compensable time. The discounted meal policy was intended as a benefit to employees—and the time was not compensable.

COUNSEL TO MANAGEMENT:

This decision is a win for employers, but shows that Plaintiffs continue to test the limits of what constitutes “hours worked” and employer “control.” Even though Taco Bell won this case, it was forced to pay attorney’s fees, costs, and spend years defending a policy which at the end of the day was found to be a BENEFIT to employees. While on their face meal policies like this that to an employer clearly benefit an employee are oftentimes fodder for the Plaintiffs bar and result in lawsuits. If you have questions about what constitutes an “on-duty” meal policy or “control” contact The Saqui Law Group.

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