Employment Litigation · Primary-source case analysis

Ferra v. Loews: Meal-and-Rest Premiums Use the Regular Rate, Not Base Hourly Pay

By Aneeta Mishra and Timothy Chan

Published April 21, 2026

Ferra resolved whether the one-hour premium for a missed meal, rest, or recovery period is calculated from base wages alone or the broader regular rate used for overtime.

The employee received incentives and hourly wages

A hotel bartender was paid hourly wages plus quarterly nondiscretionary incentive compensation. The hotel paid any meal-period premiums at her base hourly rate.

Two statutory phrases carried the same meaning

Labor Code section 226.7 uses ‘regular rate of compensation,’ while overtime law uses ‘regular rate of pay.’ Text, history, and remedial purpose showed that both refer to the regular rate that includes nondiscretionary payments rather than only the hourly wage.

The interpretation applied retroactively

The court declined prospective-only treatment. Judicial decisions ordinarily state what the statute has meant since enactment, and employer reliance or administrative ambiguity did not justify an exception.

Disposition

The court reversed the Court of Appeal and remanded. Premium calculations therefore must account for bonuses, incentives, and other nondiscretionary remuneration included in the regular rate.

Key takeaways

• Include nondiscretionary compensation in section 226.7 premium calculations.
• Audit historical as well as current premium practices.
• Distinguish discretionary bonuses from promised performance pay.
• Coordinate regular-rate calculations across overtime and break remedies.