Taco Bell Offering Discounted Meals to Employees on Break Does Not Violate FLSA or California Law

August 13, 2018

The U.S. 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 the Fair Labor Standards Act (FLSA) or California law. Taco Bell offered 30-minute meal breaks. Regarding these breaks, Taco Bell offered, on a strictly voluntary basis, discounted meals to employees, provided the meals were eaten in the restaurant. A former employee filed suit 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.” 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." The Court also stated, "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." We recommend all employers have SESCO review all wage and hour policies and practices to ensure compliance with federal and state law.