January 28, 2020

January 27, 2020

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Taco Bell’s Prohibition on Employees “Heading for the Border” With Discounted Meals Does Not Violate California Meal Break Law, Ninth Circuit Rules

Affirming a district court order dismissing a putative class action, the Ninth Circuit Court of Appeals has held that Taco Bell’s policy of requiring employees to eat employer-discounted meals in the restaurant does not convert the meal period into “on duty” time such that the meal period becomes compensable under California law. Rodriguez v. Taco Bell Corporation, 2018 U.S. App. LEXIS 19825 (9th Cir. July 18, 2018).

California Wage Order 5-2001 requires employers to relieve employees of all duties during required meal periods. During the relevant period, Taco Bell offered 30-minute meal breaks that complied with California’s requirements but also offered, on a strictly voluntary basis, discounted meals to employees, provided the meals were eaten in the restaurant. The stated purpose of this in-store consumption policy was to preclude employees from using the employee discount to purchase meals for relatives, friends, or others, which Taco Bell considered a form of theft. The plaintiff, who worked for Taco Bell for about seven years, filed suit under several state wage statutes, claiming that the “on-premises discount policy subjected the employees to sufficient employer control to render the time employees spent consuming the meals as working time under California law.” If the meal consumption time did qualify as work time, employees would be owed an additional hour of pay at their regular rate of for each workday that a “duty free” meal was not provided.

Agreeing with the district court, the Ninth Circuit concluded that under the discounted meal policy, Taco Bell’s policy properly relieves employees of all duties and relinquishes control over their activities because purchase of such meals is “entirely voluntary.” If an employee prefers to leave the premises and eat elsewhere, he or she may purchase a meal at full price, bring food from home, dine at a different establishment or choose any other option for the meal break. The plaintiff presented no evidence that employees were pressured to purchase the discounted meals, to perform job activities while consuming the discounted meals or otherwise were precluded from doing whatever they wished during their breaks (provided, of course, that they did not interfere with the restaurant’s operations). The cases cited by the plaintiff in support of her arguments were distinguishable, held the Court of Appeals, because in each one the employees were required to participate in the activity in question (e.g. riding employer-provided buses to the work site). In short, held the Court, “[t]he employees are not on call and are free to use the time in any way they wish.” Therefore, the time spent consuming a meal under the employee discount policy does not constitute work time and the case was properly dismissed.

Jackson Lewis P.C. © 2020


About this Author

Cary G Palmer, Attorney, Jackson Lewis Law Firm
Office Managing Principal

Cary G. Palmer is Office Managing Principal of the Sacramento, California, office of Jackson Lewis P.C. He represents management in employment, labor and benefits law and related litigation.

Mr. Palmer practices before the state and federal courts in California, the United States Department of Labor, the United States Equal Opportunity Commission, the California Department of Fair Employment and Housing, the California Division of Labor Standards Enforcement, and the California Workers’ Compensation Appeals Board. Mr. Palmer also defends management in statewide...