Ferra v. Loews Hollywood Hotel, LLC ( 2021 )


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  •         IN THE SUPREME COURT OF
    CALIFORNIA
    JESSICA FERRA et al.,
    Plaintiffs and Appellants,
    v.
    LOEWS HOLLYWOOD HOTEL, LLC,
    Defendant and Respondent.
    S259172
    Second Appellate District, Division Three
    B283218
    Los Angeles County Superior Court
    BC586176
    July 15, 2021
    Justice Liu authored the opinion of the Court, in which Chief
    Justice Cantil-Sakauye and Justices Corrigan, Cuéllar,
    Kruger, Groban, and Jenkins concurred.
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    S259172
    Opinion of the Court by Liu, J.
    Under California law, employers must provide employees
    with overtime pay when employees work more than a certain
    amount of time. (Lab. Code, § 510, subd. (a) (section 510(a)); all
    undesignated statutory references are to this code.) To calculate
    overtime pay, section 510(a) requires an employer to
    compensate an employee by a multiple of the employee’s
    “regular rate of pay.” California law also provides for meal, rest,
    and recovery periods. If an employer does not provide an
    employee with a compliant meal, rest, or recovery period, section
    226.7, subdivision (c) (section 226.7(c)) requires the employer to
    “pay the employee one additional hour of pay at the employee’s
    regular rate of compensation.”
    The question here is whether the Legislature intended
    “regular rate of compensation” under section 226.7(c) to have the
    same meaning as “regular rate of pay” under section 510(a),
    such that the calculation of premium pay for a noncompliant
    meal, rest, or recovery period, like the calculation of overtime
    pay, must account for not only hourly wages but also other
    nondiscretionary payments for work performed by the employee.
    We hold that the terms are synonymous: “regular rate of
    compensation” under section 226.7(c), like “regular rate of pay”
    under section 510(a), encompasses all nondiscretionary
    payments, not just hourly wages.
    1
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    I.
    From June 16, 2012, to May 12, 2014, defendant Loews
    Hollywood Hotel, LLC (Loews), employed plaintiff Jessica Ferra
    as a bartender. Loews paid Ferra hourly wages as well as
    quarterly nondiscretionary incentive payments. We use the
    term “nondiscretionary payments” to mean payments for an
    employee’s work that are owed “pursuant to [a] prior contract,
    agreement, or promise,” not “determined at the sole discretion
    of the employer.” (Division of Labor Standards Enforcement
    (DLSE), Update of the DLSE Enforcement Policies and
    Interpretations Manual (rev. 2019) § 49.1.2.4(3), p. 49-3 (2019
    DLSE Manual), citing 
    29 C.F.R. §§ 778.211
    , 778.213 (2021); see
    C.F.R. § 778.211 (2021) [a payment is discretionary if “both the
    fact that payment is to be made and the amount of the payment
    are determined at the sole discretion of the employer . . . and not
    pursuant to any prior contract, agreement, or promise causing
    the employee to expect such payments regularly”]; see also
    Alvarado v. Dart Container Corp. of California (2018) 
    4 Cal.5th 542
    , 561 (Alvarado) [“[I]t is the court’s task to construe how
    ‘regular rate of pay’ should be calculated in the circumstances
    presented here.”]; CACI No. 2702 [noting that court, not jury,
    determines appropriate rate of compensation for overtime].) If
    an hourly employee was not provided with a compliant meal or
    rest period, Loews paid the employee an additional hour of pay
    according to the employee’s hourly wage at the time the meal or
    rest period was not provided. If the employee earned any
    nondiscretionary payments in addition to an hourly wage, like
    Ferra’s quarterly incentive payments, Loews did not factor these
    2
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    payments into the calculation of premium pay owed under
    section 226.7(c).
    In 2015, Ferra filed a class action suit against Loews.
    Among other claims, Ferra alleged that Loews, by omitting
    nondiscretionary incentive payments from its calculation of
    premium pay, failed to pay her for noncompliant meal or rest
    breaks in accordance with her “regular rate of compensation” as
    required by section 226.7(c). The trial court granted summary
    adjudication for Loews on the ground that calculating premium
    pay according to an employee’s base hourly rate is proper under
    section 226.7(c). The court agreed with Loews that “regular rate
    of compensation” in section 226.7(c) is “not interchangeable”
    with the term “regular rate of pay” under section 510(a), which
    governs overtime pay. In light of this holding, the court held
    that Loews’s due process challenge to section 226.7 was moot.
    The court granted summary judgment to Loews on Ferra’s
    remaining causes of action.
    The Court of Appeal affirmed, holding that “regular rate
    of compensation” in section 226.7(c) and “regular rate of pay” in
    section 510(a) are “not synonymous, and the premium for missed
    meal and rest periods is the employee’s base hourly wage.”
    (Ferra v. Loews Hollywood Hotel, LLC (2019) 
    40 Cal.App.5th 1239
    , 1246 (Ferra).) Justice Edmon dissented on this point.
    Tracing the history of sections 510(a) and 226.7(c) and the
    meaning of “regular rate” in case law and legislative usage, she
    concluded that “ ‘regular rate of compensation’ has the same
    meaning as ‘regular rate of pay,’ and thus . . . includes
    nondiscretionary bonuses ‘[that] are a normal and regular part
    of [an employee’s] income.’ ” (Ferra, at p. 1255 (conc. & dis. opn.
    of Edmon, P. J.).)
    3
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    We granted review.
    II.
    Section 226.7(c) provides: “If an employer fails to provide
    an employee a meal or rest or recovery period in accordance with
    a state law, . . . the employer shall pay the employee one
    additional hour of pay at the employee’s regular rate of
    compensation for each workday that the meal or rest or recovery
    period is not provided.” Similar language appears in a wage
    order promulgated by the Industrial Welfare Commission
    (IWC). (See Augustus v. ABM Security Services, Inc. (2016) 
    2 Cal.5th 257
    , 262, fn. 5 [IWC is empowered to promulgate
    “legislative regulations specifying minimum requirements with
    respect to wages, hours, and working conditions”].) IWC Wage
    order No. 5-2001, which applies to hotel workers, bartenders,
    and similar workers, says that if an employer does not provide
    a compliant meal or rest period, “the employer shall pay the
    employee one (1) hour of pay at the employee’s regular rate of
    compensation for each work day that” the meal or rest period is
    not provided. (IWC wage order No. 5-2001, §§ 11(B), 12(B)
    (Wage Order No. 5-2001); see id., § 2(P)(1)–(2); Gerard v. Orange
    Coast Memorial Medical Center (2018) 
    6 Cal.5th 443
    , 448
    (Gerard) [wage and hour claims, including meal and rest break
    claims, “are ‘governed by two complementary and occasionally
    overlapping sources of authority,’ ” i.e., the Labor Code and
    wage orders].)
    “ ‘When construing the Labor Code and wage orders, we
    adopt the construction that best gives effect to the purpose of the
    Legislature and the IWC. . . . Time and again, we have
    characterized that purpose as the protection of employees —
    particularly given the extent of legislative concern about
    4
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    working conditions, wages, and hours when the Legislature
    enacted key portions of the Labor Code. . . . In furtherance of
    that purpose, we liberally construe the Labor Code and wage
    orders to favor the protection of employees.’ ” (Troester v.
    Starbucks Corp. (2018) 
    5 Cal.5th 829
    , 839, citations omitted.) In
    construing a statute or wage order whose language is
    susceptible of more than one reasonable interpretation, we
    consider “the ostensible objectives to be achieved by the statute,
    the evils to be remedied, the legislative history, public policy,
    contemporaneous administrative construction and the statutory
    scheme of which the statute is a part.” (Murphy v. Kenneth Cole
    Productions, Inc. (2007) 
    40 Cal.4th 1094
    , 1105 (Murphy).)
    The question is what the Legislature meant when it used
    the phrase “regular rate of compensation” in section 226.7(c).
    Neither the Labor Code nor Wage Order No. 5-2001 defines the
    term, and the words by themselves may reasonably be construed
    to mean either hourly wages, as Loews contends, or hourly
    wages plus nondiscretionary payments, as Ferra contends.
    Central to the parties’ dispute is a comparison of the term
    “regular rate of compensation” in section 226.7(c), which
    addresses premium pay for meal, rest, or recovery period
    violations, with the term “regular rate of pay” in section 510(a),
    which addresses overtime pay. Did the Legislature intend
    “regular rate of compensation” to be synonymous with “regular
    rate of pay,” a term long understood to encompass not only
    hourly wages but also nondiscretionary payments?
    The Court of Appeal answered no, relying on the principle
    that “ ‘[w]here different words or phrases are used in the same
    connection in different parts of a statute, it is presumed the
    Legislature intended a different meaning.’ ” (Ferra, supra, 40
    Cal.App.5th at p. 1247.) But another principle of construction
    5
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    provides that “where statutes use synonymous words or phrases
    interchangeably, those words or phrases should be understood
    to have the same meaning.” (Id. at p. 1256 (conc. & dis. opn. of
    Edmon, P. J.); see id. at p. 1266 [collecting cases].) Section
    226.7(c) and section 510(a) both use the term “regular rate,” and
    the history of these provisions shows that “regular rate” is a
    term of art encompassing not only hourly wages but also
    nondiscretionary payments. Further, as explained below, the
    words “compensation” and “pay” appear interchangeably in
    legislative and judicial usage, and we find no indication that the
    Legislature intended “regular rate of pay” in section 510(a) and
    “regular rate of compensation” in section 226.7(c) to have
    different meanings. Specifically, we find no evidence that
    “regular rate of compensation” means hourly wages only.
    A.
    “When the Legislature adopted section 226.7 in 2000, it
    did so against the backdrop of long-standing federal law that
    defined overtime pay in terms of an employee’s ‘regular rate,’
    and existing state law that defined overtime pay in terms of an
    employee’s ‘regular rate of pay.’ ” (Ferra, supra, 40 Cal.App.5th
    at p. 1257 (conc. & dis. opn. of Edmon, P. J.).) This historical
    backdrop is essential to understanding what the Legislature
    meant by “regular rate of compensation” in section 226.7(c).
    Section 7(a) of the federal Fair Labor Standards Act of
    1938 (FLSA) required employers to pay overtime “at a rate not
    less than one and one-half times the regular rate at which he is
    employed.” (Pub.L. No. 75-718 (June 25, 1938) 
    52 Stat. 1060
    ,
    1063; see 
    29 U.S.C. § 207
    (a).) Although Congress did not define
    “regular rate,” the United States Supreme Court soon held that
    an employee’s “regular rate” under the statute must reflect “the
    6
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    actual payments, exclusive of those paid for overtime, which the
    parties have agreed shall be paid during each workweek.”
    (Walling v. Harnischfeger Corp. (1945) 
    325 U.S. 427
    , 430
    (Harnischfeger); see Walling v. Hardwood Co. (1945) 
    325 U.S. 419
    , 424 (Hardwood) [“The regular rate by its very nature must
    reflect all payments which the parties have agreed shall be
    received regularly during the workweek, exclusive of overtime
    payments.”].)
    For workers paid a guaranteed hourly rate plus an
    “ ‘incentive bonus’ or ‘piecework earnings’ ” (Harnischfeger,
    supra, 325 U.S. at p. 429) for efficient performance, the “regular
    rate” is “greater . . . than the minimum base rate” (id. at p. 431).
    Where “such bonuses are a normal and regular part of [workers’]
    income” (id. at p. 432), they “do not escape the force of [FLSA]
    § 7(a) merely because they are paid in addition to a minimum
    hourly pay guaranteed by contract. . . . The conclusion that only
    the minimum hourly rate constitutes the regular rate opens an
    easy path for evading the plain design of § 7(a)” (id. at pp. 431–
    432). Further, even if “the incentive bonuses are often not
    determined or paid until weeks or even months after [regular]
    pay-days” (id. at p. 432), “the employer is not thereby excused
    from making the proper computation and payment. Section 7(a)
    requires only that the employees receive a 50% premium as soon
    as convenient or practicable under the circumstances” (id. at
    pp. 432–433).
    Congress amended the FLSA in 1949 to define “regular
    rate” for purposes of overtime “to include all remuneration for
    employment paid to, or on behalf of, the employee” (Pub.L.
    No. 81-393 (Oct. 26, 1949) 
    63 Stat. 910
    , 913; see 
    29 U.S.C. § 207
    (e)), and courts have consistently understood this language
    to encompass all nondiscretionary payments, not just base
    7
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    hourly rates. (See Local 246 Utility Workers Union of America
    v. Southern California Edison Co. (9th Cir. 1996) 
    83 F.3d 292
    ,
    295–297; Featsent v. City of Youngstown (6th Cir. 1995) 
    70 F.3d 900
    , 904–906; Reich v. Interstate Brands Corp. (7th Cir. 1995)
    
    57 F.3d 574
    , 577; see also Rosen et al., Federal Employment
    Litigation (The Rutter Group 2021) ¶ 6:905 [observing that
    “[a]ny bonus promised to employees is included in determining
    the employee’s ‘regular rate’ of pay” and collecting cases].)
    Meanwhile, as early as 1947, California’s wage orders
    imposed similar requirements for overtime pay. (See Ramirez
    v. Yosemite Water Co. (1999) 
    20 Cal.4th 785
    , 795 [IWC’s wage
    orders are “at times patterned after federal regulations” and
    “sometimes provide greater protection”]; Alcala v. Western Ag
    Enterprises (1986) 
    182 Cal.App.3d 546
    , 550 (Alcala)
    [“California’s wage orders are closely modeled after (although
    they do not duplicate), section 7(a)(1) of the [FLSA].”].) But
    instead of using the term “regular rate,” the wage orders used
    the term “regular rate of pay” in stating the requirement that
    “overtime is compensated for at not less than one and one-half
    times the employee’s regular rate of pay.” (IWC wage order
    No. 10 R (June 1, 1947) [former wage order concerning
    amusement and recreation industries]; see IWC wage order
    No. 3 R (June 1, 1947) [former wage order concerning canning
    and preserving industries]; IWC wage order No. 6 R (June 1,
    1947) [former wage order concerning laundry, dry cleaning, and
    dyeing industries]; IWC wage order No. 8 R (June 1, 1947)
    [former wage order concerning after-harvest industries].) The
    term “regular rate of pay” also appears in the 1947 version of
    Wage Order No. 5 (IWC wage order No. 5 R (June 1, 1947)) and
    in other predecessors to the current version of Wage Order No. 5
    (e.g., IWC wage order No. 5-89 (as amended June 29, 1993)).
    8
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    Despite this difference in wording, the Alcala court
    understood “regular rate of pay” in a wage order governing
    agricultural occupations to be synonymous with “regular rate”
    in the FLSA. (Alcala, supra, 182 Cal.App.3d at pp. 548–551 &
    fns. 1–2.) The DLSE, in multiple opinion letters, similarly said
    that “in determining what payments are to be included in or
    excluded from the calculation of the regular rate of pay,
    California will adhere to the standards adopted by the U.S.
    Department of Labor to the extent that those standards are
    consistent with California law.” (Dept. of Industrial Relations,
    DLSE, Chief Counsel H. Thomas Cadell, Jr., Opn. Letter
    No. 2003.01.29, Calculation of Regular Rate of Pay (Jan. 29,
    2003) p. 2, fn. 1; see, e.g., Dept. of Industrial Relations, DLSE,
    Chief Counsel H. Thomas Cadell, Jr., Opn. Letter
    No. 1994.06.17-1, Regular Rate of Pay (June 17, 1994) p. 2;
    Dept. of Industrial Relations, DLSE, Chief Counsel H. Thomas
    Cadell, Jr., Opn. Letter No. 1991.03.06, Calculation of Regular
    Rate of Pay (Mar. 26, 1991) p. 1.) And the DLSE’s 1998
    Enforcement Policies and Interpretations Manual (1998 DLSE
    Manual) stated: “Since the Industrial Welfare Commission has
    not defined the term ‘regular rate of pay,’ DLSE has determined
    that the IWC intended to adopt the definition of ‘regular rate of
    pay’ set out in the Fair Labor Standards Act . . . .” (1998 DLSE
    Manual, p. 84; see Alvarado, supra, 4 Cal.5th at p. 561 [in
    construing California’s labor laws, “we may take into
    consideration the DLSE’s expertise and special competence, as
    well as the fact that the DLSE Manual is a formal compilation
    that evidences considerable deliberation at the highest
    policymaking level of the agency”].)
    The term “regular rate of pay” first appeared in section
    510 in 1999. That year, “the Legislature enacted Assembly Bill
    9
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    No. 60 (1999–2000 Reg. Sess.) (Assembly Bill 60), known as the
    Eight-Hour-Day Restoration and Workplace Flexibility Act of
    1999 (Stats. 1999, ch. 134, § 1, p. 1820). This bill was passed in
    response to IWC wage orders that had eliminated overtime for
    employees working more than eight hours per day. The
    legislation repealed five wage orders, . . . and required the IWC
    to review its wage orders and readopt orders restoring daily
    overtime. [Citation.] The Legislature amended Labor Code
    section 510 to explicitly provide that ‘[a]ny work in excess of
    eight hours in one workday . . . shall be compensated at the rate
    of no less than one and one-half times the regular rate of pay for
    an employee.’ (Stats. 1999, ch. 134, § 4, p. 1821; cf. Stats. 1982,
    ch. 185, § 1, p. 563 [earlier version of § 510 without that
    provision].)” (Gerard, supra, 6 Cal.5th at pp. 448–449; see
    Alvarado, supra, 4 Cal.5th at p. 553.)
    Like the DLSE, courts have understood “regular rate of
    pay” in section 510(a) to have the same meaning as “regular
    rate” in the FLSA. Citing the DLSE’s opinion letters, the court
    in Huntington Memorial Hospital v. Superior Court (2005) 
    131 Cal.App.4th 893
    , 902–911 (Huntington) interpreted section
    510(a) in accordance with the meaning of “regular rate” in the
    FLSA, as elucidated in federal regulations and case law. (See,
    e.g., Hardwood, 
    supra,
     325 U.S. at p. 424.) Notably, the
    Huntington court treated “regular rate” as the operative term in
    section 510(a)’s phrase “regular rate of pay.” (Huntington, at
    p. 902 [“Under state and federal law, overtime compensation is
    based on an employee’s ‘regular rate.’ (See Lab. Code, § 510,
    subd. (a); 
    29 U.S.C. § 207
    (a)(1), (2).)”]; see Kao v. Holiday (2017)
    
    12 Cal.App.5th 947
    , 960, fn. 5 [following Huntington];
    Advanced-Tech Security Services v. Superior Court (2008)
    
    163 Cal.App.4th 700
    , 708 (Advanced-Tech) [same].)
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    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    In addition, we recently said that “an employee’s ‘regular
    rate of pay’ for purposes of Labor Code section 510 and the IWC
    wage orders is not the same as the employee’s straight time rate
    (i.e., his or her normal hourly wage rate). Regular rate of pay,
    which can change from pay period to pay period, includes
    adjustments to the straight time rate, reflecting, among other
    things, shift differentials and the per-hour value of any
    nonhourly compensation the employee has earned.” (Alvarado,
    supra, 4 Cal.5th at p. 554; see id. at p. 569 [“Not all employees
    earn at a fixed pay rate throughout a pay period, and therefore
    regular rate of pay is a weighted average reflecting work done at
    varying times, under varying circumstances, and at varying
    rates.”].) Consistent with the meaning of “regular rate” in the
    FLSA, we observed that an “attendance bonus” earned for
    weekend work (a form of “incentive pay”) was “part of an
    employee’s overall compensation package, and therefore . . . its
    per-hour value must be determined so that the employee’s
    regular rate of pay — and, derivatively, the employee’s overtime
    pay rate — reflects all the various forms of regular
    compensation that the employee earned in the relevant pay
    period.” (Alvarado, at p. 554.)
    In sum, the history above shows that the term “regular
    rate” in section 7(a) of the FLSA accounts for not only hourly
    wages but also nondiscretionary payments and that the term
    “regular rate of pay” as used in section 510(a) and in the IWC’s
    earlier wage orders has the same meaning as “regular rate” in
    the FLSA. With this backdrop in mind, we now turn to the
    phrase “regular rate of compensation” in the context of premium
    pay for a noncompliant meal, rest, or recovery period.
    11
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    B.
    As noted, when the Legislature passed Assembly Bill No.
    60 (1999–2000 Reg. Sess.) (Assembly Bill 60) in 1999, it not only
    enacted section 510 but also directed the IWC to rewrite its wage
    orders to restore daily overtime pay. “Consistent with that
    mandate, the IWC adopted a new version of Wage Order No.5
    on June 30, 2000, and it became effective on October 1, 2000.”
    (Gerard, supra, 6 Cal.5th at p. 449; see Brinker Restaurant
    Corp. v. Superior Court (2012) 
    53 Cal.4th 1004
    , 1046 (Brinker).)
    This wage order, which is the current version, provides that an
    employee who works more than eight hours a day or more than
    40 hours a week must receive one and one-half times the
    employee’s “regular rate of pay” for overtime hours worked.
    (Wage Order No. 5-2001, § 3(A)(1); see id., § 3(A)(1)(b) [requiring
    double the “regular rate of pay” for all hours worked beyond 12
    hours in a day or beyond eight hours on the seventh consecutive
    workday in a workweek].) These overtime provisions in the
    wage order echo the language of section 510(a). (See Brinker, at
    p. 1049 [“Having received a legislative rebuke, the IWC sought
    to make its orders track [Assembly Bill 60] as closely as possible
    and expressed hesitance about departing from statutory
    requirements.”].)
    In the same wage order, the IWC for the first time adopted
    provisions requiring premium pay for meal or rest break
    violations: “the employer shall pay the employee one (1) hour of
    pay at the employee’s regular rate of compensation” for each
    workday that a compliant meal or rest period is not provided.
    (Wage Order No. 5-2001, §§ 11(B), 12(B).) This is where the
    phrase “regular rate of compensation” first appeared.
    12
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    An IWC commissioner explained the purpose of these
    provisions at the June 30, 2000 hearing where the IWC adopted
    them. (See Murphy, 
    supra,
     40 Cal.4th at pp. 1109–1110 [relying
    on this hearing to discern IWC’s intent in requiring premium
    pay for meal and rest break violations].) The IWC, the
    commissioner said, had “received testimony that despite the fact
    that employees are entitled to a meal period or rest period, that
    there really is no incentive as we establish it, for example, in
    overtime or other areas, for employers to ensure that people are
    given their rights to a meal period and rest period. At this point,
    if they are not giving a meal period or rest period, the only
    remedy is an injunction against the employer or — saying they
    must give them.” (IWC public hearing transcript (June 30,
    2000) p. 25.) The new provisions, the commissioner explained,
    would ensure that employees received “proper meal periods and
    rest periods.” (Id. at p. 26.) “And, of course,” the commissioner
    concluded, “the courts have long construed overtime as a
    penalty, in effect, on employers for working people more than
    full — you know, that is how it’s been construed, as more than
    the — the daily normal workday. It is viewed as a penalty and
    a disincentive in order to encourage employers not to. So, it is
    in the same authority that we provide overtime pay that we
    provide this extra hour of pay.” (Id. at p. 30.)
    Soon    thereafter,   the   IWC    memorialized     this
    understanding in its Statement as to the Basis, a document
    “explaining ‘how and why the commission did what it did.’ ”
    (Harris v. Superior Court (2011) 
    53 Cal.4th 170
    , 179; see
    Brinker, 
    supra,
     53 Cal.4th at p. 1046.) In reviewing its wage
    orders “for purposes of complying with AB 60,” “the IWC heard
    testimony and received correspondence regarding the lack of
    employer compliance with the meal and rest period
    13
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    requirements of its wage orders. The IWC therefore added a
    provision to this section that requires an employer to pay an
    employee one additional hour of pay at the employee’s regular
    rate of pay for each work day that a meal period is not provided.”
    (IWC, Statement as to the Basis (Jan. 1, 2001) pp. 1, 20, italics
    added.) The IWC also “added a provision . . . that requires an
    employer to pay an employee one additional hour of pay at the
    employee’s regular rate of pay for each work day that a rest
    period is not provided.” (Id. at p. 21, italics added.) As the
    italicized phrases indicate, the IWC used the term “regular rate
    of pay” interchangeably with the wage order’s term “regular rate
    of compensation.” And, as the June 30, 2000 hearing transcript
    suggests, the IWC understood its approach to premium pay for
    meal or rest break violations to be analogous to its approach to
    overtime pay.
    We come now to the enactment of section 226.7. The same
    Legislature that passed Assembly Bill 60 considered several
    bills containing some version of what became section 226.7; the
    bill that ultimately passed was Assembly Bill No. 2509 (1999–
    2000 Reg. Sess.) (Assembly Bill 2509). (See Kirby v. Immoos
    Fire Protection, Inc. (2012) 
    53 Cal.4th 1244
    , 1258.) At its
    inception, Assembly Bill 2509 provided that an employer was
    required to pay “the aggrieved employee of an amount equal to
    twice his or her average hourly rate of compensation for the full
    length of the meal or rest periods during which the employee
    was required to perform any work. An employee paid on a
    piecework basis shall be entitled to an amount equal to twice the
    amount of piecework units earned during those periods, but in
    no event shall the amount be less than the applicable state
    minimum wage for the full length of those time periods during
    which any work was performed.” (Assem. Bill 2509 (1999–2000
    14
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    Reg. Sess.) as introduced Feb. 24, 2000, § 12, italics added.) This
    language remained unchanged through two rounds of
    amendments. (Assem. Bill 2509 (1999–2000 Reg. Sess.) as
    amended June 26, 2000; Assem. Bill 2509 (1999–2000 Reg.
    Sess.) as amended July 6, 2000.)
    With Assembly Bill 2509 pending, the IWC on June 30,
    2000, adopted the meal and rest break provisions in Wage Order
    No. 5-2001. (Ante, at p. 12.) Two months later, Assembly Bill
    2509 was amended to provide that “the employer shall pay the
    employee one additional hour of pay at the employee’s regular
    rate of compensation for each work day that the meal or rest
    period is not provided.” (Assem. Bill 2509 (1999–2000 Reg.
    Sess.) as amended Aug. 25, 2000, § 7, italics added.) This
    language is what the Legislature enacted in section 226.7(c).
    The reason for the amendment is clear in the legislative history:
    “In discussing the amended version of section 226.7, which
    ultimately was signed into law, the Senate Rules Committee
    explained that the changes were intended to track the existing
    provisions of the IWC wage orders regarding meal and rest
    periods.” (Murphy, supra, 40 Cal.4th at pp. 1107–1108, citing
    Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis
    of Assem. Bill 2509 (1999–2000 Reg. Sess.) as amended Aug. 25,
    2000, p. 4.) The amendment “[d]elete[d] the provisions related
    to penalties for an employer who fails to provide a meal or rest
    period” (i.e., twice the employee’s average hourly rate of
    compensation) “and instead codif[ies] the alternative penalty
    amounts adopted by the Industrial Welfare Commission” (i.e.,
    one additional hour of pay at the employee’s regular rate of
    compensation). (Assem. Conc. Sen. Amends. to Assem. Bill 2509
    (1999–2000 Reg. Sess.) as amended Aug. 25, 2000, p. 2.)
    15
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    To recap, the IWC adopted a premium pay requirement for
    meal or rest break violations using the term “regular rate of
    compensation” at the same time and in the same wage order
    (i.e., Wage Order No. 5-2001) that it adopted revised overtime
    provisions using the term “regular rate of pay.” The IWC’s
    official explanation of its action described this premium pay as
    “one additional hour of pay at the employee’s regular rate of
    pay.” Then, in enacting section 226.7(c), the Legislature defined
    premium pay for break violations as “one additional hour of pay
    at the employee’s regular rate of compensation” to track the
    meal and rest break provisions of Wage Order No. 5-2001.
    C.
    In addressing this history, Loews contends that at the
    time the IWC and the Legislature adopted the premium pay
    requirement for meal or rest break violations, the term “regular
    rate of pay” was an established term of art in the specific context
    of California overtime law. It is thus significant, Loews says,
    that the IWC and the Legislature, while using “regular rate of
    pay” in addressing overtime in Wage Order No. 5-2001 and
    section 510(a), used a different term — “regular rate of
    compensation” — to define premium pay for meal or rest break
    violations in the same wage order and in section 226.7(c). In
    Loews’s view, the Court of Appeal was correct to apply the canon
    that “ ‘[w]here different words or phrases are used in the same
    connection in different parts of a statute, it is presumed the
    Legislature intended a different meaning.’ ” (Ferra, supra,
    40 Cal.App.5th at p. 1247.)
    But canons of interpretation “are not immutable rules”;
    they are “guidelines subject to exceptions.” (Wishnev v. The
    Northwestern Mutual Life Ins. Co. (2019) 
    8 Cal.5th 199
    , 213
    16
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    [canons cannot be mechanically applied, especially when
    competing canons point in different directions].) Here, Loews’s
    argument is difficult to square with the fact that courts and the
    DLSE have consistently understood the term “regular rate of
    pay” to have the same meaning as “regular rate” in the FSLA.
    Although Loews says this “mere fact . . . does not establish that
    ‘regular rate’ is itself a term of art under California law,” Loews
    cites no authority that has trained attention on the modifier “of
    pay.” The fact that California authorities, in construing
    “regular rate of pay,” have looked to the meaning of “regular
    rate” in the FLSA implies that “regular rate” is the operative
    term of art. (See Advanced-Tech, supra, 163 Cal.App.4th at
    pp. 707–708; Huntington, supra, 131 Cal.App.4th at pp. 902–
    905; Alcala, supra, 182 Cal.App.3d at pp. 549–550; Dept. of
    Industrial Relations, DLSE, Chief Counsel H. Thomas Cadell,
    Jr., Opn. Letter No. 2003.01.29, Calculation of Regular Rate of
    Pay, supra, at p. 2, fn. 1 [“[T]he failure of the IWC to define the
    term ‘regular rate’ indicates the Commission’s intent that in
    determining what payments are to be included in or excluded
    from the calculation of the regular rate of pay, California will
    adhere to the standards adopted by the U.S. Department of
    Labor to the extent that those standards are consistent with
    California law.”]; ante, at p. 9 [citing 1994 and 1991 DLSE
    opinion letters and 1998 DLSE Manual].)
    Indeed, by the time section 226.7 was enacted, the phrase
    “regular rate” had been in use and had been treated by courts
    and agencies as the operative term for more than half a century.
    (Ante, at pp. 6–11.) There is no sign that the IWC or the
    Legislature believed otherwise when they enacted Wage Order
    No. 5-2001 and sections 510(a) and 226.7(c). The use of “regular
    rate” in those contemporaneous enactments to define both
    17
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    overtime pay and premium pay for break violations calls to mind
    a different canon: “Similar terms should be given consistent
    meaning when used in the same statutory scheme unless there
    is evidenced a contrary statutory intent.” (People v. Cook (1984)
    
    158 Cal.App.3d 948
    , 954.)
    Loews sees evidence of a contrary intent in the
    Legislature’s and IWC’s use of “regular rate” with different
    modifiers, i.e., “of pay” and “of compensation.” But neither the
    adoption history of the phrase “regular rate of compensation”
    nor the provisions in which it appears contain any hint that the
    Legislature or the IWC intended it to mean something different
    than “regular rate of pay” or specifically to mean an employee’s
    hourly rate only. In fact, the Legislature used the terms “pay”
    and “compensation” interchangeably in the very text of sections
    226.7(c) and 510(a). (See § 226.7(c) [“the employer shall pay the
    employee one additional hour of pay at the employee’s regular
    rate of compensation” (italics added)]; § 510(a) [overtime “shall
    be compensated at the rate of [a multiple of] the regular rate of
    pay” (italics added)]; ibid. [“Nothing in this section requires an
    employer to combine more than one rate of overtime
    compensation in order to calculate the amount to be paid to an
    employee for any hour of overtime work.” (italics added)].) The
    IWC similarly described its requirement of “one (1) hour of pay
    at the employee’s regular rate of compensation” for each
    workday that a compliant meal or rest period is not provided
    (Wage Order No. 5-2001, §§ 11(B), 12(B), italics added) as “one
    additional hour of pay at the employee’s regular rate of pay”
    (IWC, Statement as to the Basis, supra, at pp. 20, 21, italics
    added).
    The fact that the Legislature and IWC used “pay” and
    “compensation” interchangeably is unsurprising against the
    18
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    backdrop of similar interchangeable usage in case law. (See Bay
    Ridge Operating Co. v. Aaron (1948) 
    334 U.S. 446
    , 448–449
    [using “regular rate of pay” to mean “regular rate” under the
    FLSA]; Hardwood, 
    supra,
     325 U.S. at p. 424 [using “regular rate
    of compensation” to mean “regular rate”]; Harnischfeger, 
    supra,
    325 U.S. at p. 430 [same]; Walling v. Garlock Packing Co. (2d
    Cir. 1947) 
    159 F.2d 44
    , 46 [same]; Walling v. Wall Wire Products
    Co. (6th Cir. 1947) 
    161 F.2d 470
    , 473, 475 [using both “regular
    rate of pay” and “ ‘regular rate’ of compensation” to mean
    “regular rate”].) It is doubtful that the phrase “regular rate of
    compensation” came to have a distinct meaning that the
    Legislature and IWC silently discerned in the year 2000, but
    that the courts until then never had.
    Loews cites several federal district court opinions holding
    that “regular rate of compensation” in section 226.7(c) does not
    have the same meaning as “regular rate of pay” in section 510(a)
    and instead means an employee’s base hourly rate only. But
    those opinions did not examine the history of the provisions at
    issue; they mainly relied on the canon that “ ‘[i]f the legislature
    carefully employs a term in one statute and deletes it from
    another, it must be presumed to have acted deliberately.’ ”
    (Brum v. MarketSource, Inc. (E.D.Cal., June 19, 2017, No. 2:17–
    cv–241–JAM–EFB) 
    2017 WL 2633414
    , p. *5; see Wert v. U.S.
    Bancorp (S.D.Cal., June 9, 2015, No. 13–cv–3130–BAS (BLM))
    
    2015 WL 3617165
    , p. *3 [“[T]he legislature’s choice of different
    language is meaningful . . . .”]; Bradescu v. Hillstone Restaurant
    Group, Inc. (C.D.Cal., Sept. 18, 2014, No. SACV 13–1289–
    GW (RZx)) 
    2014 WL 5312546
    , p. *8 [same]; but see Studley v.
    Alliance Healthcare Services, Inc. (C.D.Cal., July 26, 2012,
    No. SACV 10–00067–CJC (ANx)) 
    2012 WL 12286522
    , p. *4,
    19
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    fn. 4 [“[T]he operative word or phrase in each section is not
    ‘compensation’ or ‘pay’ but rather ‘regular rate.’ ”].)
    Justice Edmon, upon examining the history, aptly
    described the difficulty with Loews’s position: “In 1999, ‘regular
    rate’ [in the FLSA] was widely understood to mean base hourly
    rate plus bonuses. Although the Legislature modified the
    federal language when it adopted section 510, the Legislature
    intended ‘regular rate of pay’ to have the same meaning as
    ‘regular rate.’ But although the Legislature modified the federal
    language in a similar (although not identical) manner when it
    adopted section 226.7, [Loews contends] it intended an entirely
    different meaning — and although it nowhere articulated that
    intended meaning, it expected parties and the courts to infer the
    meaning by its use of the word ‘compensation,’ rather than ‘pay.’
    I am not persuaded.” (Ferra, supra, 40 Cal.App.5th at p. 1265
    (conc. & dis. opn. of Edmon, P. J.).) Neither are we.
    D.
    Loews suggests that interpreting “regular rate of
    compensation” and “regular rate of pay” to be synonymous
    would render the words “of compensation” and “of pay”
    superfluous. It is true that courts should generally avoid
    interpreting statutes in a way that renders some terms
    surplusage. (Kaanaana v. Barrett Business Services, Inc. (2021)
    
    11 Cal.5th 158
    , 176.) But “ ‘ “ ‘the rule against surplusage will
    be applied only if it results in a reasonable reading of the
    legislation.’ ” ’ ” (Ferra, supra, 40 Cal.App.5th at p. 1265 (conc.
    & dis. opn. of Edmon, P. J.), quoting Park Medical Pharmacy v.
    San Diego Orthopedic Associates Medical Group, Inc. (2002) 
    99 Cal.App.4th 247
    , 254, fn. 5.)          To attribute “controlling
    significance to the modifier ‘of compensation’ ” would lead “to an
    20
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    entirely unreasonable conclusion — namely, that the
    Legislature used the phrase ‘regular rate’ in section 226.7
    without intending the meaning ‘regular rate’ had acquired over
    the course of more than 60 years.” (Ferra, at p. 1265 (conc. &
    dis. opn. of Edmon, P. J.).) Had the Legislature intended to
    diverge from decades of settled usage and, in effect, compel
    employers to make complex judgments about what is and what
    is not part of an employee’s “regular rate of compensation,” it
    likely would have said so. (See Jones v. Lodge at Torrey Pines
    Partnership (2008) 
    42 Cal.4th 1158
    , 1171.)
    Loews further contends that “[t]he rationale for defining
    ‘regular rate of pay’ to include forms of pay other than the base
    hourly rate — to ensure employers do not circumvent overtime
    laws by paying a low hourly rate — is logically inapplicable to
    break premiums, which unlike overtime premiums are not
    proportional to time worked and may be owed to employees who
    perform no overtime work.”          According to Loews, “ ‘pay’
    invariably is given for goods or services rendered, while
    ‘compensation’ additionally may pertain to remuneration for a
    loss — such as deprivation of a legally-required meal break or
    rest period.     This distinction aptly reflects this Court’s
    recognition that break premiums are designed to preserve
    employees’ health and welfare, as opposed to overtime
    premiums which are calculated to provide full wages for work
    performed.”
    But even if we were to agree with Loews that
    “compensation” and “pay” mean different things, there is little
    reason to think the former would mean something narrower
    than the latter. (Compare Black’s Law Dict. (11th ed. 2019)
    [Defining “compensation” as “ ‘[Compensation] includes wages,
    stock option plans, profit-sharing, commissions, bonuses, golden
    21
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    parachutes, vacation, sick pay, medical benefits, disability,
    leaves of absence, and expense reimbursement’ ”] with 
    id.
    [defining “Pay” as “Compensation for services performed; salary,
    wages, stipend, or other renumeration given for work done”].)
    Further, we have previously rejected the argument that
    because premium pay under section 226.7(c) is “not proportional
    to time worked,” it is “unlike overtime premiums.” In Murphy,
    we acknowledged that “a one-to-one ratio does not exist between
    the economic injury caused by meal and rest period violations
    on the one hand and the remedy selected by the Legislature on
    the other hand.” (Murphy, supra, 40 Cal.4th at p. 1112.)
    Nevertheless, we said, premium pay under section 226.7(c) does
    not differ in this respect from other remedies the Legislature
    has chosen “to compensate employees for certain kinds of labor
    or scheduling resulting in a detriment to the employee.”
    (Murphy, at p. 1112.) We gave three examples of such remedies,
    including overtime premiums under section 510(a). (Murphy, at
    pp. 1112–1113.) “Each of these forms of compensation, like the
    section 226.7 payment, uses the employee’s rate of
    compensation” — note again the interchangeable usage — “as
    the measure of pay and compensates the employee for events
    other than time spent working. An employee working nine
    hours already receives his or her normal wage for that ninth
    hour. The Legislature has directed, however, that employers
    pay a premium wage of 50 percent more for the ninth through
    twelfth hour and a 100 percent premium for the hours in excess
    of 12.” (Id. at p. 1113.)
    As Murphy makes clear, contrary to Loews’s argument,
    the 50 percent (or 100 percent) overtime premium (§ 510(a)), like
    the “additional hour of pay” premium for meal or rest break
    violations (§ 226.7(c)), “compensates the employee for events
    22
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    other than time spent working.” (Murphy, 
    supra,
     40 Cal.4th at
    p. 1113, italics added.) Employees may suffer “noneconomic
    injuries” when they are forced to work through break periods,
    like “greater risk[s] of work-related accidents and increased
    stress,” or denials of “time free from employer control that is
    often needed to be able to accomplish important personal tasks.”
    (Ibid.; see Alvarado, supra, 4 Cal.5th at p. 561, fn. 7 [quoting
    Legislature’s statements in Assem. Bill 60 (Stats. 1999, ch. 134,
    § 2, p. 1820) that “ ‘[t]he eight-hour workday is the mainstay of
    protection for California’s working people’; ‘[n]umerous studies
    have linked long work hours to increased rates of accident and
    injury’; [and] ‘[f]amily life suffers when either or both parents
    are kept away from home for an extended period of time on a
    daily basis’ ”].) We see nothing illogical about using the same
    metric (“regular rate”) to calculate the amount of the premium
    owed in both contexts. “While it may be difficult to assign a
    value to these noneconomic injuries [citation], the Legislature
    has selected an amount of compensation it deems appropriate.”
    (Murphy, at p. 1113.)
    Instead of furthering section 226.7(c)’s purpose,
    construing “regular rate of compensation” in the manner Loews
    urges would produce consequences that the Legislature likely
    did not intend. To adapt an example from Ferra’s briefing,
    suppose Employees A, B, and C each work for a chair
    manufacturer with a different compensation scheme. Employee
    A is paid a straight hourly rate of $25 per hour. Employee B is
    paid $50 per chair, plus the hourly rate for meal and rest periods
    required by law (and assume there is no other nonproductive
    time during the workday). (See § 226.2 [governing piece-rate
    compensation].) And Employee C is paid $20 per hour, plus $10
    per chair. Suppose further that, in a five-day workweek, each
    23
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    employee makes 20 chairs by working eight hours a day (i.e., no
    overtime).
    In one week, Employee A earns $1,000 ($25 per hour
    multiplied by 40 hours), as do Employee B ($50 per chair
    multiplied by 20 chairs) and Employee C ($20 per hour
    multiplied by 40 hours, plus $10 per chair multiplied by 20
    chairs). The hourly pay for each employee is $25 per hour
    ($1,000 divided by 40 hours). There is no dispute that $25 per
    hour is the “regular rate of compensation” for purposes of
    calculating meal or rest break premium pay for Employees A
    and B. (See 2002 DLSE Manual, supra, at p. 49-6.) But under
    Loews’s position, the “regular rate of compensation” for
    Employee C is only the base hourly rate of $20 per hour.
    We see no reason why the Legislature or IWC would have
    singled out workers like Employee C, who receive both hourly
    wages and other nondiscretionary payments, for such
    disadvantage instead of requiring premium pay in accordance
    with the total nondiscretionary payments earned by each
    employee. Were we to adopt Loews’s interpretation, employers
    would be incentivized to minimize employees’ base hourly rates
    and shift pay elsewhere, thereby harming employees who are
    paid in some form other than a base hourly rate. Loews’s
    interpretation thus undercuts one of section 226.7’s
    functions: “shaping employer conduct” to comply with labor
    standards. (Murphy, supra, 40 Cal.4th at p. 1109; see id. at
    p. 1110 [“The IWC intended that, like overtime pay provisions,
    payment for missed meal and rest periods be enacted as a
    premium wage to compensate employees, while also acting as
    an incentive for employers to comply with labor standards.”].)
    24
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    Assembly Bill 2509’s legislative history also weighs
    against Loews’s reading.      As noted, Assembly Bill 2509
    originally included differentiated remedies for piece-rate
    workers and hourly workers. (Ante, at p. 14.) But these were
    replaced with one remedy for all workers: an hour of pay at the
    “regular rate of compensation,” whatever the underlying basis
    of their compensation. (Ante, at pp. 14–15.) This early iteration
    of Assembly Bill 2509 shows that the Legislature was equally
    concerned with protecting piece-rate workers and hourly
    workers, and it supports an inference that the Legislature
    believed the language it ultimately adopted — “regular rate of
    compensation” — would protect workers equally, regardless of
    how their compensation is structured.
    In sum, we hold that the term “regular rate of
    compensation” in section 226.7(c) has the same meaning as
    “regular rate of pay” in section 510(a) and encompasses not only
    hourly wages but all nondiscretionary payments for work
    performed by the employee. This interpretation of section
    226.7(c) comports with the remedial purpose of the Labor Code
    and wage orders and with our general guidance that the “state’s
    labor laws are to be liberally construed in favor of worker
    protection.” (Alvarado, supra, 4 Cal.5th at p. 562.)
    III.
    Finally, Loews argues that our decision today should
    apply only prospectively. But no considerations of fairness or
    public policy warrant such a holding.
    In general, judicial decisions apply retroactively.
    (Vazquez v. Jan-Pro Franchising International, Inc. (2021) 
    10 Cal.5th 944
    , 951 (Vazquez); see Newman v. Emerson Radio
    Corp. (1989) 
    48 Cal.3d 973
    , 978.) This rule applies to decisions
    25
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    interpreting statutes, for “ ‘[a] judicial construction of a statute
    is an authoritative statement of what the statute meant before
    as well as after the decision of the case giving rise to that
    construction.’ ” (Vazquez, at p. 951.) And the fact that a decision
    disapproves decisions by lower courts does not itself justify
    applying our decision prospectively only. (Id. at p. 952.) We
    recognize “ ‘narrow exceptions to the general rule of
    retroactivity . . . when considerations of fairness and public
    policy are so compelling in a particular case that, on balance,
    they outweigh the considerations that underlie the basic rule.’ ”
    (Ibid.)
    In this case, we interpret a statute against the backdrop
    of a divided Court of Appeal decision and conflicting opinions of
    various federal district courts. We neither overrule nor
    disapprove any decision. Because the question presented is not
    one on “ ‘which this court had previously issued a definitive
    decision, from the outset any reliance on the previous state of
    the law could not and should not have been viewed as firmly
    fixed as would have been the case had we previously spoken.’ ”
    (Vazquez, supra, 10 Cal.5th at p. 953.) “In short, defendant
    cannot claim reasonable reliance on settled law.” (Alvarado,
    supra, 4 Cal.5th at p. 573.)
    Loews argues, first, that it and employers like it
    reasonably relied on the canon that a lawmaker is presumed to
    intend a different meaning when it uses different words in a
    statutory scheme. But it is well established that “canons of
    statutory construction are merely aids to ascertaining probable
    legislative intent.” (Stone v. Superior Court (1982) 
    31 Cal.3d 503
    , 521, fn. 10.) “ ‘ “No single canon of statutory construction
    is an infallible guide to correct interpretation in all
    circumstances” ’ ” (Tellez v. Superior Court (2020) 56
    26
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    Cal.App.5th 439, 448), and “canons of construction . . . will not
    be applied so as to defeat the underlying legislative intent
    otherwise determined” (Dyna-Med, Inc. v. Fair Employment &
    Housing Com. (1987) 
    43 Cal.3d 1379
    , 1391). As explained above,
    the considerations bearing on the IWC’s and Legislature’s intent
    do not support the application of the canon cited by Loews.
    Second, relying on Claxton v. Waters (2004) 
    34 Cal.4th 367
    (Claxton), Loews argues that our decision will have a
    substantive effect because it will expose employers to “millions”
    in liability. But Loews cites no evidence that retroactive
    application of our holding will expose employers to “millions” in
    liability, and even if Loews were correct, it is not clear why we
    should favor the interest of employers in avoiding “millions” in
    liability over the interest of employees in obtaining the
    “millions” owed to them under the law.
    Further, Claxton does not suggest that retroactivity is
    disfavored when a judicial decision may have the substantive
    effect of imposing liability. In Claxton, we explained that one
    consideration relevant to the retroactivity determination was
    “ ‘ “the nature of the change as substantive or procedural.” ’ ”
    (Claxton, supra, 34 Cal.4th at p. 378, quoting Smith v. Rae-
    Venter Law Group (2002) 
    29 Cal.4th 345
    , 372.) In Smith, we
    relied on Woods v. Young (1991) 
    53 Cal.3d 315
    , where we
    declined to apply retroactively our decision involving a statute
    of limitations for medical malpractice actions. (Woods, at
    p. 330.) The decision in Woods was “procedural, affecting only
    the calculation of the limitations period.” (Ibid.) “Prospective
    application will not remove any substantive defense to which
    defendants would otherwise be entitled,” we explained, but
    retroactive application “would bar plaintiffs’ actions regardless
    of their merits.”       (Ibid. [“Retroactive application of an
    27
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    unforeseeable procedural change is disfavored when such
    application would deprive a litigant of ‘any remedy
    whatsoever.’ ”].) Here, our decision will not deprive any litigant
    of a remedy or defense. An employee may claim that his or her
    employer has violated section 226.7, and the employer may
    defend against such a claim as it has always done. We have
    simply determined how the Legislature intended premium pay
    to be calculated under section 226.7(c), nothing more.
    Third, Loews asserts that applying our decision
    prospectively only would not negatively impact the
    administration of justice or frustrate the purpose our decision.
    But “if we were to restrict our holding to prospective application,
    we would, in effect, negate” the full extent of the remedy “that
    the Legislature has determined to be appropriate in this
    context,” thereby “exceed[ing] our appropriate judicial role.”
    (Alvarado, supra, 4 Cal.5th at p. 573.) Loews also argues that
    our interpretation of section 226.7(c) violates due process
    because ordinary people could not have foreseen our
    interpretation, but we have rejected similar arguments before.
    (See Alvarado, at p. 572 [“This argument, too, is meritless.”].)
    Because our reading of “regular rate of compensation” in section
    226.7(c) is “[o]ne very reasonable way to construe” the phrase,
    Loews “is simply wrong when it argues that ordinary people
    could not have predicted plaintiff's interpretation, and that it
    would violate defendant’s due process rights to adopt that
    interpretation.” (Alvarado, at p. 572.)
    For these reasons, we reject Loews’s request that we apply
    our decision only prospectively.
    28
    FERRA v. LOEWS HOLLYWOOD HOTEL, LLC
    Opinion of the Court by Liu, J.
    CONCLUSION
    We reverse the judgment of the Court of Appeal and
    remand for further proceedings consistent with this opinion.
    LIU, J.
    We Concur:
    CANTIL-SAKAUYE, C. J.
    CORRIGAN, J.
    CUÉLLAR, J.
    KRUGER, J.
    GROBAN, J.
    JENKINS, J.
    29
    See next page for addresses and telephone numbers for counsel who
    argued in Supreme Court.
    Name of Opinion Ferra v. Loews Hollywood Hotel, LLC
    __________________________________________________________
    Procedural Posture (see XX below)
    Original Appeal
    Original Proceeding
    Review Granted (published) XX 
    40 Cal.App.5th 1239
    Review Granted (unpublished)
    Rehearing Granted
    __________________________________________________________
    Opinion No. S259172
    Date Filed: July 15, 2021
    __________________________________________________________
    Court: Superior
    County: Los Angeles
    Judge: Kenneth R. Freeman
    __________________________________________________________
    Counsel:
    Moss Bollinger, Dennis F. Moss, Ari E. Moss; Law Offices of Sahag
    Majarian II and Sahag Majarian II for Plaintiffs and Appellants.
    Altshuler Berzon, Michael Rubin, Eileen B. Goldsmith; Haffner Law,
    Joshua H. Haffner, Graham G. Lambert; Stevens and Paul D. Stevens
    for California Employment Lawyers Association and Jacqueline F.
    Ibarra as Amici Curiae on behalf of Plaintiffs and Appellants.
    Capstone Law, Melissa Grant, Ryan H. Wu and John E. Stobart for
    Bet Tzedek as Amicus Curiae on behalf of Plaintiffs and Appellants.
    Ballard Rosenberg Golper & Savitt, Richard S. Rosenberg, John J.
    Manier and David Fishman for Defendant and Respondent.
    Seyfarth Shaw, Jeffrey A. Berman, Brian T. Ashe and Kiran A. Seldon
    for California Employment Law Counsel, Employers Group and
    Chamber of Commerce of the United States as Amici Curiae on behalf
    of Defendant and Respondent.
    Blank Rome, Brock Seraphin; Lathrop GPM and Laura Reathaford for
    Association of Southern California Defense Counsel as Amicus Curiae
    on behalf of Defendant and Respondent.
    Counsel who argued in Supreme Court (not intended for
    publication with opinion):
    Dennis F. Moss
    Moss Bollinger LLP
    15300 Ventura Boulevard, Suite 207
    Sherman Oaks, CA 91403
    (310) 773-0323
    Eileen B. Goldsmith
    Altshuler Berzon LLP
    177 Post Street, Suite 300
    San Francisco, CA 94108
    (415) 421-7151
    David J. Fishman
    Ballard Rosenberg Golper & Savitt, LLP
    15760 Ventura Boulevard, 18th Floor
    Encino, CA 91436
    (818) 508-3707