Title: Naranjo v. Spectrum Security Services, Inc.
Citation: N/A
Docket Number: S279397
State: California
Issuer: California Supreme Court
Date: May 6, 2024

IN THE SUPREME COURT OF 
CALIFORNIA 
 
GUSTAVO NARANJO et al., 
Plaintiffs and Appellants, 
v. 
SPECTRUM SECURITY SERVICES, INC., 
Defendant and Appellant. 
 
S279397 
 
Second Appellate District, Division Four 
B256232 
 
Los Angeles County Superior Court 
BC372146 
 
 
May 6, 2024 
 
Justice Kruger authored the opinion of the Court, in which 
Acting Chief Justice Evans and Justices Corrigan, Liu, Groban, 
Jenkins, and Rodriguez* concurred. 
 
 
__________________________ 
* 
Associate Justice of the Court of Appeal, First Appellate 
District, Division Three, assigned pursuant to article VI, section 
6 of the California Constitution. 
 
 
1 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
S279397 
 
Opinion of the Court by Kruger, J. 
 
California law requires employers to provide their 
employees with written wage statements listing gross and net 
wages earned, hourly pay rates, hours worked, and other 
employment-related information.  (Lab. Code, § 226.)  If a 
claimant demonstrates that an employer has failed to comply 
with this requirement, the claimant is entitled to an injunction 
compelling compliance and an award of costs and reasonable 
attorney’s fees.  (Id., subd. (h).)  But in the case of a “knowing 
and intentional failure . . . to comply,” the law provides for 
statutory penalties of up to $4,000 or the employee’s actual 
damages, should the employee’s damages exceed the statutory 
penalties.  (Id., subd. (e)(1).)  The question presented is whether 
an employer has knowingly and intentionally failed to comply 
with section 226’s requirements when the employer had a good 
faith, yet erroneous, belief that it was in compliance. 
This case returns to us after we resolved a division in state 
and federal courts about whether the law requires employers to 
treat certain amounts — premium pay awarded for the 
deprivation of a lawful meal or rest break — as wages earned 
for purposes of provisions penalizing the willful failure to timely 
pay wages to former employees (Lab. Code, § 203) and the 
knowing and intentional failure to report wages earned in 
compliance with Labor Code section 226.  Answering that 
question in the affirmative, we held that employers are required 
to treat missed-break premium pay as wages.  We remanded for 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
2 
consideration of whether the requirements for imposing 
penalties were otherwise satisfied.   
On remand, the answer to the question of Labor Code 
section 203 penalties was clear.  Under long established law, an 
employer cannot incur civil or criminal penalties for the willful 
nonpayment of wages when the employer reasonably and in 
good faith disputes that wages are due.  (See In re Trombley 
(1948) 31 Cal.2d 801, 808; Barnhill v. Robert Saunders & Co. 
(1981) 125 Cal.App.3d 1, 8–9; see also Cal. Code Regs., tit. 8, 
§ 13520.)  But courts are divided over whether an employer’s 
good faith belief will also bar Labor Code section 226 penalties 
for a knowing and intentional failure to report the same unpaid 
wages, or any other required information, on a wage statement.  
We now conclude that if an employer reasonably and in good 
faith believed it was providing a complete and accurate wage 
statement in compliance with the requirements of section 226, 
then it has not knowingly and intentionally failed to comply 
with the wage statement law.  We affirm the judgment of the 
Court of Appeal, which reached the same conclusion. 
I. 
We have previously recounted the factual and procedural 
background of this case.  (Naranjo v. Spectrum Security 
Services, Inc. (2022) 13 Cal.5th 93, 102–104 (Naranjo III).)  We 
restate the central facts here, adding further background 
relevant to the issue now before us.   
Defendant Spectrum Security Services, Inc. (Spectrum) 
provides secure custodial services to federal agencies.  Spectrum 
transports and guards prisoners and detainees who require 
outside medical attention or have other appointments outside 
custodial facilities.  Plaintiff Gustavo Naranjo worked as a 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
3 
guard for Spectrum.  Naranjo was suspended and later fired 
after leaving his post to take a meal break, in violation of a 
Spectrum policy that required custodial employees to remain on 
duty during all meal breaks.  (Naranjo III, supra, 13 Cal.5th at 
pp. 102–104.)   
 
Naranjo filed a putative class action on behalf of Spectrum 
employees, alleging, among other things, that Spectrum had 
violated state regulations governing meal breaks.  (Lab. Code, 
§ 226.7 (section 226.7); Industrial Welf. Com. (IWC) wage order 
No. 4-2001, § 11.)  The complaint sought an additional hour of 
pay — known as “premium pay” — for each day on which 
Spectrum failed to provide employees a legally compliant meal 
break.  (See § 226.7, subd. (c); IWC wage order No. 4-2001, 
§§ 11(B), 12(B).)  The complaint further alleged two additional 
Labor Code violations related to Spectrum’s premium pay 
obligations:  (1) that Spectrum had violated Labor Code sections 
201, 202, and 203 by failing to timely pay owed meal break 
premiums as wages to employees once they were discharged or 
resigned; and (2) that Spectrum had violated Labor Code section 
226 (section 226) by failing to report the premium pay it owed 
as wages on employees’ wage statements.  Among other forms of 
relief, the complaint sought the statutory penalties prescribed 
for “willful[]” failure to comply with the timely payment 
requirements (Lab. Code, § 203 (section 203), subd. (a)), and the 
penalties prescribed for the “knowing and intentional” failure to 
comply with the wage statement requirements (§ 226, subd. 
(e)(1)).   
 
In the approximately decade and a half since it was filed, 
the case has taken a number of turns up and down the court 
system.  The details of its extensive procedural history are not 
strictly necessary to understand the issues now before us, except 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
4 
as they illuminate the scope and nature of the many debates 
that have surfaced about Spectrum’s liability for Naranjo’s meal 
break claims. 
 
At first, the trial court granted summary judgment for 
Spectrum, ruling that Naranjo’s sole remedy lay in a federal 
administrative claim procedure for employees of federal 
contractors.  The Court of Appeal disagreed and reversed.  
(Naranjo v. Spectrum Security Services, Inc. (2009) 172 
Cal.App.4th 654, 663, 670 (Naranjo I).)   
 
On remand, the trial court certified a class for the meal 
break and related timely payment and wage statement claims 
and held a trial in three phases.  (Naranjo III, supra, 13 Cal.5th 
at p. 103; Naranjo v. Spectrum Security Services, Inc. (2023) 88 
Cal.App.5th 937, 942 (Naranjo IV).)  The first phase was a bench 
trial where Spectrum presented certain affirmative defenses.  In 
particular, Spectrum argued that California meal break 
requirements did not apply to the class members because they 
were performing federal functions and because many of them 
worked on federal properties outside the reach of state 
regulation.  (Naranjo IV, at p. 942.)  At the end of the first phase, 
the trial court held that Spectrum failed to carry its burden to 
establish any of these defenses.  (Ibid.)   
In the second phase, the section 226.7 meal break claims 
were tried to a jury.  (Naranjo IV, supra, 88 Cal.App.5th at 
p. 942.)  The relevant IWC wage order, wage order No. 4-2001, 
requires employers to give covered employees an off-duty meal 
period on shifts lasting over five hours.  (Ibid., citing IWC wage 
order No. 4-2001, § 11(A) and Brinker Restaurant Corp. v. 
Superior Court (2012) 53 Cal.4th 1004, 1034.)  Wage order No. 4-
2001 recognizes an exception to the off-duty meal period 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
5 
requirement that “allows for ‘ “on duty” ’ meal periods if ‘the 
nature of the work prevents an employee from being relieved of 
all duty,’ but only when ‘by written agreement between the 
parties an on-the-job paid meal period is agreed to.’ ”  (Naranjo 
IV, at p. 942.)  The trial court agreed with Naranjo that 
Spectrum did not have a valid written on-duty meal break 
agreement with its employees during part of the class period and 
directed a verdict for the class on the meal break claim for a 
period starting in June 2004 and ending in September 2007.  
(Ibid.)  The jury, however, found Spectrum not liable for the 
period starting on October 1, 2007, after Spectrum had issued a 
memorandum setting forth its on-duty meal break policy and 
obtained written consent to that policy from employees.  (Ibid.) 
In the third phase of the trial, the court considered the 
class’s claims under section 203 and section 226.  (Naranjo III, 
supra, 13 Cal.5th at p. 103.)  Spectrum argued that it was not 
liable under section 203 and section 226 because premium pay 
awarded under section 226.7 is not “wages” subject to these 
statutory timing and reporting requirements, but instead a 
penalty for break violations.  Spectrum also argued that even if 
it had violated an obligation to timely pay and report the 
premium pay owed, its failure to comply was neither “willful” 
for purposes of awarding section 203 penalties nor “knowing and 
intentional” for purposes of awarding section 226 penalties.  
Spectrum argued that the class could not recover section 203 
penalties because it had raised several reasonable defenses in 
good faith, which, according to Division of Labor Standards 
Enforcement (DLSE) regulations and governing appellate case 
law, precluded a finding that it “willfully” failed to pay premium 
pay upon separation.  (§ 203, subd. (a); see Cal. Code Regs., tit. 
8, § 13520; Barnhill v. Robert Saunders & Co., supra, 125 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
6 
Cal.App.3d at pp. 8–9 (Barnhill).)  Spectrum argued that its 
failure to comply with section 226’s reporting requirements 
likewise was not “knowing and intentional.”  Among other 
things, Spectrum cited the testimony of John Oden, its Vice 
President and Personnel Manager, who stated that he “was not 
aware that there was any obligation to pay an extra hour of pay 
if Spectrum officers did not get an off-duty meal break.”   
The trial court found that Spectrum had, in fact, violated 
sections 203 and 226 by failing to pay and report the missed-
break premium pay as wages in accordance with those 
provisions.  But the court issued a split decision on the question 
of penalties.  With respect to section 203 penalties, the court 
ruled in Spectrum’s favor.  The court found that “Spectrum’s 
defenses presented in the first phase of the trial . . . , if 
successful, would have defeated plaintiffs’ claims in their 
entirety” and that those defenses “were presented in good faith 
and were not unreasonable or unsupported by the evidence.”  
Thus, under DLSE regulations and governing case law, 
Spectrum’s failure to timely pay the premiums was not willful.  
But with respect to section 226 penalties, the court ruled against 
Spectrum.  The trial court found that Spectrum was liable for 
penalties because its failure to report premium pay for missed 
meal breaks in employees’ wage statements was “knowing and 
intentional and not inadvertent.”   
Both sides appealed the trial court’s ruling.  The Court of 
Appeal affirmed the trial court’s holding that Spectrum had 
violated meal break laws between June 2004 and September 
2007.  But it reversed the trial court’s holding that Spectrum 
had violated section 203 and section 226 by failing to timely pay 
and report the meal break premium pay owed as “wages,” 
reasoning that the premium pay was instead in the nature of a 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
7 
penalty rather than compensation for work performed.  
(Naranjo v. Spectrum Security Services, Inc. (2019) 40 
Cal.App.5th 444, 474 (Naranjo II).)   
Because the Court of Appeal’s decision deepened a conflict 
on this issue, we granted review to decide whether section 203 
and section 226 claims can be brought based on unpaid and 
unreported missed-break premium pay.  (Naranjo III, supra, 13 
Cal.5th at p. 104.)  We answered that question in the 
affirmative.  We held:  “Missed-break premium pay is indeed 
wages subject to the Labor Code’s timely payment and reporting 
requirements, and it can support section 203 waiting time 
penalties and section 226 wage statement penalties where the 
relevant conditions for imposing penalties are met.”  (Id. at 
p. 125.)  We thus reversed the decision of the Court of Appeal.  
But because the Court of Appeal had not addressed the parties’ 
arguments as to whether the relevant conditions for imposing 
penalties under sections 203 and 226 were met, we remanded 
for the Court of Appeal to consider the parties’ arguments on 
that issue.  (Naranjo III, at p. 126.)   
This brings us to the decision now before us on review.  On 
remand from this court, the Court of Appeal affirmed the trial 
court’s conclusion that Spectrum’s failure to timely pay meal 
period premium wages was not “willful,” and therefore did not 
support penalties under section 203, because substantial 
evidence supported the conclusion that Spectrum had a good 
faith basis for believing it was not liable.  (Naranjo IV, supra, 88 
Cal.App.5th at p. 948.)   
The Court of Appeal held, however, that the trial court 
erred in finding that Spectrum’s failure to report meal premium 
pay on employees’ wage statements was “ ‘knowing and 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
8 
intentional.’ ”  (Naranjo IV, supra, 88 Cal.App.5th at p. 951.)  
The Court of Appeal reasoned that the section 203 “willfulness” 
requirement and the section 226 “knowing and intentional” 
requirement are substantially identical, so the same finding of 
good faith that precluded an award of penalties under section 
203 should also preclude an award of penalties under section 
226.  (Naranjo IV, at pp. 949–951.)  It further noted that, “[i]n 
addition to the trial court’s finding that a good faith dispute 
existed regarding whether premium pay was owed, . . . there 
was a good faith dispute regarding whether premium pay 
constituted ‘wages’ that must be reported on wage statements,” 
which was unsettled until this court decided Naranjo III in 
2022.  (Id. at p. 951, fn. 8.) 
As the Court of Appeal acknowledged, the issue has 
divided the many state appellate courts and federal district 
courts that have considered it.  The Court of Appeal in this case 
aligned itself with “the majority view” among federal district 
courts “that an employer’s good faith belief it is not violating the 
California Labor Code precludes a finding of a knowing and 
intentional violation” of section 226.  (Naranjo IV, supra, 88 
Cal.App.5th at p. 950; Oman v. Delta Air Lines, Inc. (N.D.Cal. 
2022) 610 F.Supp.3d 1257, 1273–1275 (Oman II); Arroyo v. Int’l 
Paper Co. (N.D.Cal. 2020) 611 F.Supp.3d 824, 840–842; 
Magadia v. Wal-Mart Associates, Inc. (N.D.Cal. 2019) 384 
F.Supp.3d 1058, 1084, revd. in part, vacated in part on other 
grounds (9th Cir. 2021) 999 F.3d 668.)  “To hold otherwise would 
‘read out of [section] 226[, subdivision] (e) the mental state 
implicated by the phrase “knowing and intentional.” ’ ”  
(Naranjo IV, at p. 951, quoting Arroyo, at p. 841.) 
As the Court of Appeal recognized, a smaller group of 
federal district courts have reached a different conclusion.  
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
9 
(Naranjo IV, supra, 88 Cal.App.5th at p. 951, citing Greenlight 
Sys., LLC v. Breckenfelder (N.D.Cal., June 28, 2021, No. 19-cv-
06658-EMC) 2021 WL 2651377 at p. *13, 2021 U.S.Dist. Lexis 
120288 at p. *39.)  So have other Courts of Appeal.  These courts 
have concluded that a violation is “ ‘knowing and intentional’ ” 
if the employer is aware of the “ ‘ “factual predicate” ’ ” 
underlying the violation — for instance, that it has not reported 
certain information on an employee’s wage statement — 
regardless of whether the employer believes in good faith that it 
has complied with the law.  (Furry v. East Bay Publishing, LLC 
(2018) 30 Cal.App.5th 1072, 1085 (Furry); Kao v. Holiday (2017) 
12 Cal.App.5th 947, 961–962 (Kao); Gola v. University of San 
Francisco (2023) 90 Cal.App.5th 548 (Gola).)1   
We granted Naranjo’s petition for review to resolve the 
conflict. 
II. 
A. 
The wage statement statute, section 226, was added to the 
Labor Code in 1943.  (Stats. 1943, ch. 1027, § 1, p. 2965.)  In its 
 
1  
The Court of Appeal in this case distinguished Furry and 
Kao on the ground that those cases had rejected a defense to 
section 226 penalties when employers argue ignorance of the 
law, whereas here Spectrum argues that it believed in good faith 
that it was complying with the law.  (Naranjo IV, supra, 88 
Cal.App.5th at p. 951, fn. 7.)  This distinction appears to rest on 
a misreading of Furry and Kao, both of which clearly reject a 
good faith (and not merely ignorance-based) defense. 
 
The decision in Gola, supra, 90 Cal.App.5th 548, issued 
after the Court of Appeal’s decision in this case.  It expressly 
considered and rejected the Court of Appeal’s decision, instead 
siding with Furry and Kao.  (Id. at pp. 566–567.)   
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
10 
original form, section 226 simply required employers to provide 
an itemized statement of deductions from wages.  Section 226 
has since been amended numerous times.  The statute currently 
in force contains detailed requirements for the content of wage 
statements, including requirements to report an employee’s 
hours worked, wages earned, hourly rates, and employer- and 
employee-identifying information.  (§ 226, subd. (a).)   
As initially enacted, the statute contained no express 
specification of remedies available to private plaintiffs.  At first, 
enforcement of the provision was left to the DLSE under its 
general authorization to enforce labor laws.  (See Lab. Code, 
§ 95.)  But in 1976, the Legislature added the provision at issue 
in this case, prescribing statutory penalties for knowing and 
intentional violations.  (Stats. 1976, ch. 832, § 1, pp. 1899–1900; 
see Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 
1094, 1108 [“In section 226, the Legislature imposed a penalty 
on employers who fail to provide itemized wage statements that 
comply with the Labor Code.  (§ 226, subd. (e) [$50 for initial 
violation, $100 for subsequent violations].)”].)  That provision, 
as amended, now provides:  “An employee suffering injury as a 
result of a knowing and intentional failure by an employer to 
comply with subdivision (a) [requiring provision of wage 
statements containing specified information] is entitled to 
recover the greater of all actual damages or fifty dollars ($50) 
for the initial pay period in which a violation occurs and one 
hundred dollars ($100) per employee for each violation in a 
subsequent pay period, not to exceed an aggregate penalty of 
four thousand dollars ($4,000), and is entitled to an award of 
costs and reasonable attorney’s fees.”  (§ 226, subd. (e)(1).)  (To 
“suffer injury” within the meaning of this provision is not quite 
what it sounds like; an employee is deemed to be injured if the 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
11 
employer either fails to provide any wage statement or if it 
provides a wage statement that fails to provide “accurate and 
complete information” about certain items such that the 
employee “cannot promptly and easily determine from the wage 
statement alone” certain specified wage-related information.  
(Id.,  subd. (e)(2)(A), (B).)) 
In 1984, the Legislature added another enforcement 
provision, Labor Code section 226.6, that makes the knowing 
and intentional violation of section 226 a misdemeanor offense:  
“Any employer who knowingly and intentionally violates the 
provisions of Section 226, or any officer, agent, employee, 
fiduciary, or other person who has the control, receipt, custody, 
or disposal of, or pays, the wages due any employee, and who 
knowingly and intentionally participates or aids in the violation 
of any provision of Section 226 is guilty of a misdemeanor” and 
faces fines of up to $1,000, imprisonment of up to one year, or 
both, “in addition to any other penalty provided by law.”  (Lab. 
Code, § 226.6, added by Stats. 1984, ch. 1490, § 3, p. 5218 and 
amended by Stats. 2010, ch. 328, § 150.5, pp. 1718–1719.)   
The statute does not define what constitutes a “knowing 
and intentional” violation.  But in 2012, the Legislature added a 
provision specifying what a “knowing and intentional” violation 
is not:  “For purposes of this subdivision, a ‘knowing and 
intentional 
failure’ 
does 
not 
include 
an 
isolated 
and 
unintentional payroll error due to a clerical or inadvertent 
mistake.  In reviewing for compliance with this section, the 
factfinder may consider as a relevant factor whether the 
employer, prior to an alleged violation, has adopted and is in 
compliance with a set of policies, procedures, and practices that 
fully comply with this section.”  (§ 226, subd. (e)(3), added by 
Stats. 2012, ch. 843, § 1, p. 6629.)   
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
12 
Whether or not a violation is knowing and intentional, the 
statute makes clear that “[a]n employee may also bring an 
action for injunctive relief to ensure compliance with this 
section, and is entitled to an award of costs and reasonable 
attorney’s fees.”  (§ 226, subd. (h), formerly subd. (g), added by 
Stats. 2002, ch. 933, § 1, p. 5903.)  This provision means that 
any plaintiff who establishes a section 226 violation is entitled 
to costs and attorney’s fees, as well as an injunction compelling 
future compliance.  The question before us concerns only the 
circumstances under which a plaintiff is entitled to statutory 
penalties in addition to these other forms of relief, based on a 
“knowing and intentional failure by an employer to comply with 
[section 226,] subdivision (a).”  (§ 226, subd. (e)(1).)   
B. 
The question revolves around the mental element, or 
scienter, specified in section 226’s penalty provision:  What must 
be shown to demonstrate “a knowing and intentional failure by 
an employer to comply with [section 226,] subdivision (a)” (§ 226, 
subd. (e)(1))?  The Courts of Appeal and federal district courts 
that have addressed this issue have taken two divergent 
approaches, as do the parties now before us.  Under the 
approach that Naranjo advocates, courts determine whether an 
employer’s failure to comply with wage statement requirements 
was knowing and intentional by asking whether the employer 
was aware of the “factual predicate” constituting the violation.  
Under this test, a failure to comply with section 226 is knowing 
and intentional if the employer was aware of the underlying 
facts giving rise to its violation of section 226, subdivision (a) 
and the violation was not the product of a clerical error or 
inadvertent mistake.  (See, e.g., Gola, supra, 90 Cal.App.5th at 
p. 566, citing Furry, supra, 30 Cal.App.5th at p. 1085, and Kao, 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
13 
supra, 12 Cal.App.5th at pp. 961–962.)  Here, according to 
Naranjo, Spectrum’s failures to comply with section 226 were 
knowing and intentional because Spectrum knew that it did not 
provide guards with off-duty meal breaks, that it did not pay 
meal premiums for missed breaks, and that it did not report 
missed breaks and unpaid meal premiums on wage statements.  
It is irrelevant, in Naranjo’s view, whether Spectrum knew or 
should have known that the law required it to do any of these 
things.  
Spectrum, for its part, argues that the plain meaning of 
the phrase “knowing and intentional failure to comply” requires 
a showing that the employer knew that it was required to 
include certain information in wage statements — here, unpaid 
premium pay for missed meal breaks — and nevertheless 
intentionally omitted that information from the wage 
statements that it provided.  Spectrum argues that it is not 
liable for penalties under that provision because it had a 
reasonable, good faith basis for believing (1) that it did not owe 
its guards premium pay for missed breaks and (2) that it was 
not, in any event, obligated to report missed-break premium pay 
on wage statements.  Both of these questions were ultimately 
decided against Spectrum after years of litigation, but Spectrum 
contends penalties are not warranted because it had a 
reasonable basis at the time for believing the law was otherwise. 
 
In everyday life and in the law both, the word “knowing” 
is generally used to mean “done with awareness or 
deliberateness” or “intentional.”  (Webster’s 3d New Internat. 
Dict. (2002) p. 1252; see also Black’s Law Dict. (4th rev. ed. 
1968) p. 1012, col. 1 [defining “knowingly” as “[w]ith knowledge; 
consciously; intelligently; willfully; intentionally”].)  The word 
“intentional,” for its part, generally means “done by intention,” 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
14 
which “simply indicates what one proposes to do or accomplish.”  
(Webster’s 3d New Internat. Dict., supra, p. 1176; see also 
Black’s Law Dict., supra, p. 947, col. 2 [defining “intent” as 
“[d]esign, resolve, or determination with which person acts”; 
“purpose to use particular means to effect certain result”; “the 
exercise of intelligent will, the mind being fully aware of the 
nature and consequences of the act which is about to be done, 
and with such knowledge, and with full liberty of action, willing 
and electing to do it”]; id. at p. 948, col. 1 [similarly defining 
“intention” as “[d]etermination to act in a certain way or to do a 
certain thing”; “[m]eaning; will; purpose; design”].)  Both 
parties’ arguments understand the terms in these generally 
accepted senses.  The critical debate between them concerns not 
so much what the terms “knowing” and “intentional” mean, but 
what the terms modify.  That is to say, what, precisely, must be 
done knowingly and intentionally:  violating the law, or the acts 
or omissions constituting the violation?   
 
On its face, the statute might appear to answer the 
question:  It is the “failure to comply” with the law that must be 
knowing and intentional — not simply the act of issuing a wage 
statement that omits certain information that the law, properly 
interpreted, requires to be included.  The wording of the penalty 
provision, which connects the employer’s culpable state of mind 
to a violation of the law, is reasonably read to excuse intentional 
acts or omissions that are based on a reasonable, good faith 
mistake about what compliance with the law requires.  (See, 
e.g., Safeco Ins. Co. of America v. Burr (2007) 551 U.S. 47, 68–
70 [the phrase “willfully fails to comply with any requirement 
imposed under this subchapter” (15 U.S.C. § 1681n(a)) in the 
federal Fair Credit Reporting Act applies where the defendant 
either knew it was violating the statute or showed reckless 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
15 
disregard for whether it was in compliance]; McLaughlin v. 
Richland Shoe Co. (1988) 486 U.S. 128, 129 [same, for the 
phrase “ ‘arising out of a willful violation’ ” in the Fair Labor 
Standards Act]; Trans World Airlines, Inc. v. Thurston (1985) 
469 U.S. 111, 125 (Thurston) [same, for the damages provision 
in the Age Discrimination in Employment Act (ADEA), which 
applies “ ‘only in cases of willful violations’ ”]; see also Rehaif v. 
United States (2019) 588 U.S. ___ [139 S.Ct. 2191, 2200] (Rehaif) 
[sentencing provision applicable to anyone who “knowingly 
violates” (18 U.S.C. § 924(a)(2)) the federal prohibition on 
firearm possession by convicted felons and other legally 
prohibited persons requires proof “both that the defendant knew 
he possessed a firearm and that he knew he belonged to the 
relevant category of persons barred from possessing a firearm”]; 
Liparota v. United States (1985) 471 U.S. 419, 428 (Liparota) 
[prohibition on use of food stamps “ ‘knowing [them] to have 
been received . . . in violation of’ ” federal law requires that the 
defendant knew of the illegality].)2   
 
Naranjo’s contrary understanding is also reasonable, 
however.  There is no hard-and-fast rule that any mental state 
requirement deployed in connection with the words “failure to 
comply” or “violation” necessarily connotes a requirement that 
 
2  
Throughout this opinion, we refer to interpretations of 
mens rea terms in criminal statutes, as well as in civil statutes, 
to illustrate certain general propositions.  The specific question 
before us, however, concerns only the availability of civil 
penalties in the Labor Code.  We do not suggest that cases 
elaborating mens rea principles in the criminal context are 
necessarily determinative in the interpretation of civil 
provisions like the one before us.  Nor, certainly, is our 
discussion intended to upset settled interpretations of criminal 
mens rea provisions.   
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
16 
the defendant appreciate the illegality of what it has done or 
failed to do.3  (See Jerman v. Carlisle, McNellie, Rini, Kramer & 
Ulrich L.P.A. (2010) 559 U.S. 573, 585 (Jerman); id. at pp. 582–
583 [federal Fair Debt Collection Practices Act defense for a debt 
collector who can show its “violation was not intentional and 
resulted from a bona fide error notwithstanding the 
maintenance of procedures reasonably adapted to avoid any 
such error” (15 U.S.C. § 1692k(c)) applies to mistakes of fact, but 
not mistakes about what the law requires]; see also, e.g., Bryan 
v. United States (1998) 524 U.S. 184, 193 [in the context of a 
criminal statute, “unless the text of the statute dictates a 
different result, the term ‘knowingly’ merely requires proof of 
knowledge of the facts that constitute the offense” (fn. 
omitted)].)  Ultimately the issue here cannot be decided based 
on the plain text, read in isolation, but on careful construction 
of the words of the penalty provision “in their particular 
statutory context.”  (Jerman, at p. 585.) 
Two features of this context are particularly relevant here, 
and lead us to conclude that section 226, subdivision (e)(1) is 
best read to allow for a defense based on good faith belief in 
compliance.  First, the operative “knowing and intentional” 
language does not appear in a liability provision, but in a 
penalty provision.  In other words, the purpose of asking 
 
3 
To be clear, neither is there a hard-and-fast rule that any 
mental state requirement deployed in connection with the 
description 
of 
a 
particular 
act 
necessarily 
precludes 
consideration of whether the defendant appreciates the 
illegality of the conduct.  Our decision in In re Trombley, supra, 
31 Cal.2d 801 (Trombley), discussed below, is a case in point.  
(See id. at p. 808 [criminal statute punishing “willful” failure to 
pay wages is inapplicable where the defendant disputes in good 
faith that wages are due].) 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
17 
whether the employer has knowingly and intentionally failed to 
comply with the requirements of section 226 is not to determine 
whether or not the employer has, in fact, violated the statute.  
There is no doubt that an employer who issues incomplete wage 
statements is not complying with the statute, and an employee 
who can so demonstrate in court is entitled to remedies 
consisting of injunctive relief, costs, and reasonable attorney’s 
fees.  (§ 226, subd. (h).)  The question is only whether the 
employee is also entitled to an additional monetary remedy in 
the 
nature 
of 
penalties 
for 
knowing 
and 
intentional 
noncompliance.   
As a general rule, “courts refuse to impose civil penalties 
against a party who acted with a good faith and reasonable 
belief in the legality of his or her actions.”  (Lusardi Construction 
Co. v. Aubry (1992) 1 Cal.4th 976, 996–997 [addressing civil 
penalties for violations of the prevailing wage statute for 
employees working on public work projects (Lab. Code, § 1775), 
citing Whaler’s Village Club v. California Coastal Com. (1985) 
173 Cal.App.3d 240, 263, and No Oil, Inc. v. Occidental 
Petroleum Corp. (1975) 50 Cal.App.3d 8, 30].)  If an injured party 
is fully compensated, penalties will generally not be imposed 
unless “there has been a grossly negligent, willful or fraudulent 
breach of a duty.”  (Lusardi, at p. 996.)  Much like punitive 
damages, civil penalties are frequently aimed at some “ ‘positive 
element of conscious wrongdoing’ ” or bad faith.  (Kolstad v. 
American Dental Assn. (1999) 527 U.S. 526, 538 (Kolstad), 
quoting McCormick, Law of Damages (1935) § 79, p. 280; cf. 
Halo Electronics, Inc. v. Pulse Electronics, Inc. (2016) 579 U.S. 
93, 105 [“The subjective willfulness of a patent infringer, 
intentional or knowing, may warrant enhanced damages”]; 
Thurston, supra, 469 U.S. at p. 125 [liquidated damages, which 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
18 
are “punitive in nature,” are imposed “ ‘only in cases of willful 
violations’ ” of the ADEA].) 
That is because the purpose of imposing civil penalties is 
typically, as with punitive damages, not primarily to 
compensate, but to deter and punish.  (See, e.g., Kwan v. 
Mercedes-Benz of North America, Inc. (1994) 23 Cal.App.4th 
174, 184 [stating that civil penalties under the Song-Beverly 
Consumer Warranty Act, “like other civil penalties, [are] 
imposed as punishment or deterrence of the defendant, rather 
than to compensate the plaintiff”]; Troensegaard v. Silvercrest 
Industries, Inc. (1985) 175 Cal.App.3d 218, 226–228 [agreeing 
with the defendant that awarding punitive damages in addition 
to civil penalties constitutes improper double punishment 
because the two remedies serve similar functions].)  Those who 
proceed on a reasonable, good faith belief that they have 
conformed their conduct to the law’s requirements do not need 
to be deterred from repeating their mistake, nor do they reflect 
the sort of disregard of the requirements of the law and respect 
for others’ rights that penalty provisions are frequently designed 
to punish.  (See, e.g., People v. Nunn (1956) 46 Cal.2d 460, 468 
[“ ‘good faith’ ” is “ordinarily used to describe that state of mind 
denoting honesty of purpose, freedom from intention to defraud, 
and, generally speaking, means being faithful to one’s duty or 
obligation”]; see also Pugh v. See’s Candies, Inc. (1988) 203 
Cal.App.3d 743, 764 [quoting approvingly Merriam-Webster’s 
similar definition of “good faith” as, inter alia, “ ‘a state of mind 
indicating honesty and lawfulness of purpose:  . . . belief that 
one’s conduct is not unconscionable . . . absence of fraud, deceit, 
collusion, or gross negligence’ ”].)   
That section 226, subdivision (e)(1)’s “knowing and 
intentional” requirement defines a condition for imposing 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
19 
penalties, not finding liability, distinguishes this case from a 
case like Jerman.  That case concerned whether a defendant 
could be held liable but not, as here, how the defendant is to be 
held liable.  (See Jerman, supra, 559 U.S. at pp. 581–583; 15 
U.S.C. § 1692k(c) [“A debt collector may not be held liable in any 
action brought under this subchapter if the debt collector shows 
by a preponderance of evidence that the violation was not 
intentional” (italics added)].)   
This case more closely resembles cases like Thurston, 
supra, 469 U.S. 111, in which the high court concluded that, to 
be responsible for liquidated damages based on a “ ‘willful’ ” 
violation of the ADEA, the defendant must know that its 
conduct violates the ADEA or else act in reckless disregard of 
that law (id. at pp. 125, 128–129), or Kolstad, supra, 527 U.S. 
526, in which the court held that a punitive damages provision 
applicable 
when 
the 
employer 
violated 
federal 
antidiscrimination 
law 
“with 
‘malice 
or 
with 
reckless 
indifference to the [employee’s] federally protected rights’ ” 
trains attention on “the employer’s knowledge that it may be 
acting in violation of federal law, not its awareness that it is 
engaging in discrimination” (id. at p. 535, italics omitted).  Any 
employer that fails to comply with section 226 can be the subject 
of a DLSE enforcement action under Labor Code section 95 or a 
private suit for injunctive relief under section 226, subdivision 
(h), regardless of whether its noncompliance is “knowing and 
intentional.”  Statutory penalties under section 226, subdivision 
(e)(1), on the other hand, only come into play when the employer 
not only fails to comply, but does so knowingly and intentionally.  
When a statute imposes a two-tier remedial structure, with 
steeper penalties based on the employer having knowingly and 
intentionally violated the law, it is reasonable to infer that the 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
20 
Legislature intended for the provision to target those who 
knowingly and intentionally flout the wage statement law, and 
not those who have made good faith mistakes about what the 
law requires.4   
The second, and equally critical, contextual consideration 
concerns the relationship between section 226 and other 
provisions of the Labor Code.  Section 226 wage statement 
violations may be raised as freestanding claims.  But as this case 
illustrates, they are more typically raised as derivative claims 
of other Labor Code claims concerning rates of pay and the 
wages owed for labor — i.e., the substance of the transactions 
that section 226 requires to be documented on an itemized 
statement furnished to the employee.  Employees will often 
argue that an employer failed to pay them certain amounts to 
which they were entitled — missed-break premium pay or 
overtime, for instance — and on that basis will allege both 
claims for failure to promptly pay wages under section 203 and, 
relatedly, failure to report wages earned under section 226.  
What this means in practice is that an employer’s good faith 
 
4  
Misdemeanor liability for wage statement violations 
similarly attaches only when an employer “knowingly and 
intentionally violates the provisions of Section 226.”  (Lab. Code, 
§ 226.6.)  Naranjo makes no effort to distinguish this provision 
governing criminal liability from section 226, subdivision (e)(1).  
Indeed, Naranjo’s counsel conceded at oral argument that 
adopting his position would spell potential criminal liability for 
employers 
that 
fail 
to 
comply 
with 
wage 
statement 
requirements 
based 
on 
a 
reasonable, 
good 
faith 
misunderstanding of their obligations.  We do not address that 
question here, except to observe that it seems likewise unlikely 
that the Legislature intended to prescribe criminal punishment 
for employers that make good faith mistakes about the 
requirements of the wage statement law. 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
21 
mistake about whether certain amounts are owed to a particular 
employee will frequently give rise to at least two different causes 
of action and associated remedies.  In Naranjo III, we dispelled 
any doubt there might have been about the permissibility of 
bringing this sort of derivative wage statement claim when we 
explained that the wage statement requirements apply to 
amounts earned, even if those amounts were not paid because of 
confusion over whether the amounts were owed in the first 
place.  (See Naranjo III, supra, 13 Cal.5th at p. 121.)   
Because claims for failure to make timely payment of 
wages and failure to report wages earned so often go hand in 
hand, it is useful to compare the timely payment cause of action 
and the remedies it makes available.  Much like section 226, 
subdivision (e)(1), the timely payment provisions contain 
penalties for late payment based on a heightened mental state 
requirement:  “If an employer willfully fails to pay, without 
abatement or reduction, . . . any wages of an employee who is 
discharged or who quits, the wages of the employee shall 
continue as a penalty from the due date thereof at the same rate 
until paid or until an action therefor is commenced” for a 
maximum of 30 days.  (§ 203, subd. (a), italics added.)   
This penalty provision was enacted in 1937.  (Stats. 1937, 
ch. 90, § 203, p. 197.)  In the decades that have passed since, the 
authorities have uniformly recognized a good faith defense to 
section 203 “waiting time” penalties.  The Court of Appeal 
gestured to such a defense in Davis v. Morris (1940) 37 
Cal.App.2d 269, in which the members of a mining partnership 
appealed an award of waiting time penalties against them on 
the ground that “the failure to pay the wages was not ‘wilful’ 
since, in good faith, [they] believed they were not due to the 
[plaintiff] who contributed his services as a member of the 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
22 
partnership.”  (Id. at p. 271.)  The court rejected the members’ 
argument based on the evidence, without questioning the 
premise that a good faith belief that wages were not owed to the 
plaintiff would preclude an award of penalties:  “It was the sole 
province of the trial court to determine whether the defendants 
were in good faith in claiming that wages were not due because 
the plaintiff contributed his services as a member of the 
partnership.”  (Id. at p. 274.) 
In 1948, this court construed Labor Code section 216, 
subdivision (a), which makes it a misdemeanor to “willfully 
refuse[] to pay wages due and payable after demand has been 
made,” to incorporate a good faith defense.  There, citing Davis, 
we held that this provision does not “make the mere failure to 
pay wages a crime, nor does it subject an employer to 
imprisonment who disputes in good faith an employee’s claim 
for wages.”  (Trombley, supra, 31 Cal.2d at p. 808.)  We noted 
that “[a] similar construction was placed on section 203 of the 
Labor Code which imposes penalties where an employer 
‘willfully fails to pay . . . wages of an employee who is discharged 
or who quits.’  In interpreting that section, it was recognized 
that a dispute in good faith as to whether any wages were due 
would be a defense to an action for such penalties.  (Davis v. 
Morris, [supra,] 37 Cal.App.2d 269 [99 P.2d 345].)”  (Trombley, 
at p. 808.)  In sum, we explained, Labor Code section 216 “makes 
it a crime for an employer having the ability to pay, knowingly 
and intentionally to refuse to pay wages which he knows are 
due.”  (Trombley, at pp. 807–808.)  
Some decades later, the court in Barnhill, supra, 125 
Cal.App.3d 1, also followed the suggestion in Davis in 
recognizing a good faith defense to section 203 penalties.  But in 
Barnhill, unlike Davis, the defense succeeded.  The employer in 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
23 
Barnhill had withheld an employee’s wages as a “setoff” to a 
debt that the employee owed the employer.  (Barnhill, at p. 8.)  
Whether such withholding was unlawful was an unsettled 
question of law, as an equitable defense based on the setoff 
doctrine was plausible and “several Courts of Appeal had 
expressed the view that setoffs against employees’ wages were 
proper.”  (Ibid.)  Given the legal uncertainty, the Barnhill court 
concluded that “appellant should not be penalized for believing 
that setoff was proper and payment of wages not required” and 
its “attempt to exercise a right to setoff was not wilful 
nonpayment of wages.”  (Ibid.)  Because the employer had acted 
in good faith, it had not acted willfully, and section 203 penalties 
were not appropriate even though the employer was ultimately 
mistaken about the lawfulness of its actions. 
The rule of Barnhill has since been codified in DLSE 
regulations, which provide, in pertinent part:  “A willful failure 
to pay wages within the meaning of Labor Code Section 203 
occurs when an employer intentionally fails to pay wages to an 
employee when those wages are due.  However, a good faith 
dispute that any wages are due will preclude imposition of 
waiting time penalties under Section 203.”  (Cal. Code Regs., tit. 
8, § 13520.)  Courts have likewise uniformly recognized a good 
faith defense to penalties under section 203.  (See, e.g., Amaral 
v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1204 
(Amaral) [“So long as no other evidence suggests the employer 
acted in bad faith, presentation of a good faith defense, based in 
law or fact, will negate a finding of willfulness”]; Diaz v. Grill 
Concepts Services, Inc. (2018) 23 Cal.App.5th 859, 868 (Diaz) 
[relying on Trombley, Barnhill, and Amaral as setting the 
standards for willfulness and good faith but affirming the trial 
court’s rejection of a good faith defense based on unexcused 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
24 
ignorance of the law]; see also Choate v. Celite Corp. (2013) 215 
Cal.App.4th 1460, 1468 [“an employer’s reasonable, good faith 
belief that wages are not owed may negate a finding of 
willfulness”]; Nordstrom Com. Cases (2010) 186 Cal.App.4th 
576, 584 [“There is no willful failure to pay wages if the employer 
and employee have a good faith dispute as to whether and when 
the wages were due”]; Armenta v. Osmose, Inc. (2005) 135 
Cal.App.4th 314, 325 [“A good faith belief in a legal defense will 
preclude a finding of willfulness”]; Road Sprinkler Fitters Local 
Union No. 669 v. G & G Fire Sprinklers, Inc. (2002) 102 
Cal.App.4th 765, 782 [“An employer’s good faith mistaken belief 
. . . may negate a finding of willfulness”].)   
The parties dispute whether “knowing and intentional” 
connotes a materially different standard from “willful.”  There 
is some authority to support Naranjo’s theory that the two 
mental state standards carry different presumptions about good 
faith mistakes about the law.  (See, e.g., Jerman, supra, 559 U.S. 
at pp. 584–585.)  But the most pertinent California case, 
Trombley, did not draw such a distinction, instead using the 
terms interchangeably:  Though Labor Code section 216 speaks 
of a “willful” failure to pay wages, we understood that provision 
to punish an employer who, “having the ability to pay, 
knowingly and intentionally to refuse to pay wages which he 
knows are due.”  (Trombley, supra, 31 Cal.2d at pp. 807–808, 
italics added.)  Before Trombley, other California authority had 
likewise recognized that “willfully” can denote a culpable mental 
state closely akin to knowledge and intent.5  And several 
 
5 
In 1898, for instance, this court interpreted “ ‘willfully’ ” in 
a perjury statute as requiring proof that the defendant made a 
 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
25 
provisions of the Labor Code not at issue here appear to reflect 
this long-established understanding that the terms “knowing,” 
“intentional,” and “willful” (and their adverbial forms) can be 
used interchangeably.6 
 
statement “with the consciousness that he did not know that it 
was true, and with the intent that it should be received as a 
statement of what was true in fact.”  (People v. Von Tiedeman 
(1898) 120 Cal. 128, 135.)  Early civil appellate cases show a 
similar understanding of “willfully” at work.  In a number of 
insurance cases, the Court of Appeal concluded that, to void an 
insurance policy, an insured’s inaccurate statement must be 
“willfully false” — that is, “must have been knowingly and 
intentionally made by the insured with knowledge of its falsity 
and with the intention of defrauding the company.”  (Miller v. 
Fireman’s Fund Ins. Co. (1907) 6 Cal.App. 395, 398; accord, 
Pedrotti v. American Nat. Fire Ins. Co., etc. (1928) 90 Cal.App. 
668, 671; Shaw v. Imperial Mut. L. & B. Assn. (1935) 4 
Cal.App.2d 534, 537–538.)  More generally, doing an act 
“willfully” has long been understood as doing it deliberately or 
by an affirmative, conscious choice:  As the Court of Appeal put 
it over a century ago, the term “ ‘willful,’ as ordinarily used in 
courts of law [means] merely that the thing done or omitted to 
be done was done or omitted intentionally,” and “[i]t amounts to 
nothing more than this:  That the person knows what he is 
doing, intends to do what he is doing, and is a free agent.”  (May 
v. New York M. Picture Corp. (1920) 45 Cal.App. 396, 404, citing 
Benkert v. Benkert (1867) 32 Cal. 467, 470 [explaining that 
“wilful” ordinarily means “intentional”] and Towle v. Matheus 
(1900) 130 Cal. 574, 577 [same].)   
6  
Labor Code section 210, for example, provides penalties 
for violations of statutes that dictate when employees are to be 
paid.  For initial violations, the penalty is $100 “for each failure 
to pay each employee.”  (Lab. Code, § 210, subd. (a)(1).)  But for 
“any willful or intentional violation,” the penalty is $200 “for 
each failure to pay each employee, plus 25 percent of the amount 
unlawfully withheld.”  (Id., subd. (a)(2), italics added; see also 
 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
26 
Moreover, while Labor Code sections 203 and 216 speak of 
the willful failure to pay, section 226, subdivision (e)(1) speaks 
of the knowing and intentional failure to comply with the law.  
This choice reinforces the conclusion that section 226’s penalty 
provision was designed to capture a concept similar to the one 
we articulated Trombley — that is, to avoid penalizing an 
employer who reasonably and in good faith disputes that it is 
required to report certain amounts as wages or otherwise 
disputes its obligation to craft its wage statements in a 
particular manner. 
As a practical matter, because employees so often bring 
claims for violations of section 203 and section 226 that derive 
from the same primary violations of the Labor Code, the two 
penalty provisions are best read in a manner that harmonizes 
them rather than one that sets them at cross-purposes.  
(Kavanaugh v. West Sonoma County Union High School Dist. 
(2003) 29 Cal.4th 911, 919 [“a statute should be interpreted 
‘ “with reference to the whole system of law of which it is a part 
so that all may be harmonized and have effect,” ’ ” quoting Select 
Base Materials v. Board of Equal. (1959) 51 Cal.2d 640, 645].)  If 
 
id., § 225.5, subd. (b) [similar penalties for “any willful or 
intentional violation”].)  Labor Code section 6311.5, which 
imposes misdemeanor liability on anyone “who, after receiving 
notice to evacuate or leave, willfully and knowingly directs an 
employee to remain in, or enter, an area closed due to a menace 
to the public health or safety,” links “willful” with “knowing.”  
(Lab. Code, § 6311.5, subd. (a)(1), italics added; see also id., 
§§ 1695.7, subd. (c)(3) [“knowingly and willfully”; misdemeanor 
provision], 6396, subd. (c) [same].)  These examples suggest that 
“knowing,” “intentional,” and “willful” are used interchangeably 
in the Labor Code to denote a culpable mental state that 
warrants imposing harsher remedies such as steeper penalties 
and misdemeanor liability. 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
27 
anything, as a number of federal district courts have observed, 
the case may be stronger for withholding penalties for 
inadequate wage statements when the employer demonstrates 
a good faith belief in its conduct’s legality, as “ ‘failure to pay 
wages would seem to warrant lesser tolerance of defenses than 
failing to provide accurate wage statements.’ ”  (Oman II, supra, 
610 F.Supp.3d at p. 1275, quoting Woods v. Vector Mktg. Corp. 
(N.D.Cal., May 22, 2015, No. C-14-0264 EMC) 2015 WL 2453202 
at p. *4, fn. 3.)  We see no sound reason why the Legislature 
would have wished to withhold penalties for nonpayment of 
wages when an employer “disputes in good faith an employee’s 
claim for wages” (Trombley, supra, 31 Cal.2d at p. 808), and yet 
would have wished to impose penalties for failing to document 
those same earned but unpaid wages on an itemized wage 
statement.7  The most logical inference to draw from the 
 
7  
We are not persuaded by Naranjo’s suggestion that this 
asymmetrical treatment would make sense because “all other 
remunerative sections of the labor code and wage orders depend 
on” compliance with section 226.  Certainly section 226 serves 
an important purpose, “which is ‘to ensure an employer 
“document[s] the basis of the employee compensation payments” 
to assist the employee in determining whether he or she has 
been compensated properly.’ ”  (Oman v. Delta Air Lines, Inc. 
(2020) 9 Cal.5th 762, 775 (Oman I), quoting Soto v. Motel 6 
Operating, L.P. (2016) 4 Cal.App.5th 385, 390 (Soto).)  But an 
employer’s payment of employees’ wages does not depend in any 
relevant sense on the issuance of compliant wage statements.  
And as we have repeatedly observed, it is ultimately the full and 
prompt payment of wages that is of overriding importance.  (See, 
e.g., Oman I, at p. 777 [“ ‘ “ ‘Delay of payment or loss of wages 
results in deprivation of the necessities of life, suffering inability 
to meet just obligations to others, and, in many cases may make 
the wage-earner a charge upon the public’ ” ’ ” (quoting Smith v. 
 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
28 
wording of section 226, subdivision (e)(1), read in its broader 
statutory context, is that the Labor Code considers an 
employer’s good faith a defense to penalties for nonpayment and 
nonreporting alike. 
 
Naranjo raises two primary objections to this conclusion.  
The first is that to permit an employer’s good faith belief that it 
was in compliance to defeat a claim of penalties would run 
counter to the age-old legal maxim “ignorance of the law is no 
excuse.”  (See, e.g., Novoa v. Charter Communications, LLC 
(E.D.Cal. 2015) 100 F.Supp.3d 1013, 1028 [invoking the maxim 
to reject the good faith defense]; see also Cabardo v. Patacsil 
(E.D.Cal. 2017) 248 F.Supp.3d 1002, 1010 [adopting Novoa’s 
reasoning]; Kao, supra, 12 Cal.App.5th at p. 962 [same]; Furry, 
supra, 30 Cal.App.5th at p. 1085 [following Kao and Cabardo].)   
 
This maxim reflects a principle that is deeply rooted in the 
law.  It explains why, for example, in an ordinary criminal 
prosecution, the state must prove only that the defendant knew 
or intended his criminal actions, and need not take on the 
additional burden of proving the defendant understood the 
illegality of those actions.  (See Stark v. Superior Court (2011) 
52 Cal.4th 368, 397 [in a prosecution for bigamy, for example, 
“the defendant must know that he is marrying and that he is 
already married to another,” but “[t]he defendant need not know 
his conduct is illegal”].)  But this venerable principle, stated 
categorically as it often is, nonetheless has well-understood 
exceptions.  The law sometimes does make the consequences of 
 
Superior Court (2006) 39 Cal.4th 77, 82)]; see also Voris v. 
Lampert (2019) 7 Cal.5th 1141, 1148 [“prompt and complete 
wage payments are of critical importance to the well-being of 
workers, their families, and the public at large”].)   
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
29 
a person’s actions depend on the person’s understanding of the 
governing law.  We have observed, for instance, that where 
“violation of a penal statute is premised on the violator’s 
harboring a particular mental state with respect to the nonpenal 
legal status of a person, thing, or action,” it is “ ‘firmly 
established’ ” that an offense’s requirement of “ ‘any special 
mental element, such as that the prohibited act be committed 
knowingly, fraudulently, corruptly, maliciously or wilfully’ ” will 
not be met if “ ‘some mistake of nonpenal law’ ” precluded the 
defendant from forming the requisite mens rea.  (People v. 
Hagen (1998) 19 Cal.4th 652, 661, fn. 4, italics omitted.)  The 
high court has similarly concluded that “the maxim [that 
ignorance or mistakes of law are not excuses] does not normally 
apply where a defendant ‘has a mistaken impression concerning 
the legal effect of some collateral matter and that mistake 
results in his misunderstanding the full significance of his 
conduct,’ thereby negating an element of the offense.”  (Rehaif, 
supra, 588 U.S. at p. ___ [139 S.Ct. at p. 2198].)  A penal statute 
specifying that the defendant is liable if he or she “knowingly 
violates” (18 U.S.C. § 924(a)(2)) one or more listed legal 
provisions therefore does not make criminally liable the 
defendant who is unaware of the legal conditions that make his 
conduct unlawful.  (Rehaif, at pp. 2199–2200; see also Liparota, 
supra, 471 U.S. at p. 433 [holding that a statute imposing 
criminal liability on “whoever knowingly uses, transfers, 
acquires, alters, or possesses” food stamps “in any manner” not 
authorized by law, 7 U.S.C. § 2024(b)(1), required proof “that the 
defendant knew that his acquisition or possession of food stamps 
was . . . unauthorized”].)  When laws are specifically aimed at 
conduct that has been undertaken with disrespect or disregard 
for the governing law, it follows that the law will exempt 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
30 
unwitting violations — “despite the legal cliche ‘ignorance of the 
law is no excuse.’ ”  (Flores-Figueroa v. United States (2009) 556 
U.S. 646, 652.)8 
Naranjo’s 
second 
objection 
rests 
on 
section 
226, 
subdivision (e)(3), which states that “a ‘knowing and intentional 
failure’ does not include an isolated and unintentional payroll 
error due to a clerical or inadvertent mistake.”  Naranjo adopts 
the reasoning of certain courts that have read this language, 
which was added in 2012, as an exhaustive statement of what is 
not “knowing and intentional.”  As the Gola court put it, the 
addition of subdivision (e)(3) shows “that the Legislature 
intended to exclude only truly errant or mistaken violations 
from the reach of section 226’s penalty provisions, not competing 
legal interpretations.”  (Gola, supra, 90 Cal.App.5th at p. 566; 
see also Furry, supra, 30 Cal.App.5th at p. 1085 [holding that 
the employer had not presented a viable defense because it 
conceded that the wage statements were deficient in the manner 
alleged by the employee and did not “contend that the requisite 
information was omitted due to a clerical or inadvertent 
mistake”].)  At the outset, the parties disagree about whether 
subdivision (e)(3) is applicable at all in this case, since it was not 
enacted until 2012 — years after the events relevant to the 
penalty issue in this case, which occurred between June 2004 
and September 2007.  We need not resolve this dispute; whether 
 
8  
We speak here, of course, solely of the penalty provision in 
section 226, subdivision (e)(1).  As we have already explained, 
even unwitting violations of the wage statement law can be 
pursued in a DLSE enforcement action or a private suit seeking 
injunctive relief and an award of costs and attorney’s fees.  
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
31 
subdivision (e)(3) applies retroactively or not, it does not alter 
the analysis. 
 
Naranjo’s argument to the contrary rests on a misreading 
of section 226, subdivision (e)(3).  That provision does not 
purport to set out a comprehensive definition of what “knowing 
and intentional” means.  It merely states one thing that 
“knowing and intentional” does not mean:  “a ‘knowing and 
intentional 
failure’ 
does 
not 
include 
an 
isolated 
and 
unintentional payroll error due to a clerical or inadvertent 
mistake.”  (§ 226, subd. (e)(3), italics added.)  It does not follow 
from this that a failure to comply is knowing and intentional 
unless it stems from an isolated payroll error.  As a general 
matter, statements about what a statutory term does or does not 
include should be read as illustrative rather than exhaustive.  
(See Garner’s Dict. of Legal Usage (3d ed. 2011) p. 439 
[“including” “should not be used to introduce an exhaustive list, 
for it implies that the list is only partial”], citing Puerto Rico 
Maritime Shipping Auth. v. I.C.C. (D.C. Cir. 1981) 645 F.2d 
1102, 1112, fn. 26 [“It is hornbook law that the use of the word 
‘including’ indicates that the specified list of carriers that follows 
is illustrative, not exclusive”]; see also Ornelas v. Randolph 
(1993) 4 Cal.4th 1095, 1101 [“ ‘includes’ [is] ordinarily a term of 
enlargement rather than limitation”].)  More importantly, to 
read the provision in this manner would set the wage statement 
law at odds with itself.  Not every wage statement violation 
depends on a payroll error (isolated or not).  For all those wage 
statement violations that depend on some other sort of error — 
say, a factual mistake about whether a particular employee is 
based in California and is thus entitled to a wage statement that 
complies with California law (compare Ward v. United Airlines, 
Inc. (2020) 9 Cal.5th 732, 760 [“Section 226 applies to wage 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
32 
statements provided by an employer if the employee’s principal 
place of work is in California”] with Oman I, supra, 9 Cal.5th at 
p. 776 [“non-California-based” employees are not entitled to 
wage statements that comply with California requirements]) — 
the effect of Naranjo’s reading of the 2012 amendment would be 
to read the “knowing and intentional” requirement out of section 
226, subdivision (e)(1).  We presume this is not what the 
Legislature intended when it added subdivision (e)(3) to the 
statute.  (See, e.g., California Cannabis Coalition v. City of 
Upland (2017) 3 Cal.5th 924, 945 [invoking the “strong 
presumption” against repeals by implication]; accord, Meza v. 
Portfolio Recovery Associates, LLC (2019) 6 Cal.5th 844, 863 [we 
expect the Legislature to speak clearly when it deviates from 
established rules].) 
 
As a variation on the same theme, Naranjo directs our 
attention to the next sentence of subdivision (e)(3), which states:  
“In reviewing for compliance with this section, the factfinder 
may consider as a relevant factor whether the employer, prior to 
an alleged violation, has adopted and is in compliance with a set 
of policies, procedures, and practices that fully comply with this 
section.”  (§ 226, subd. (e)(3).)  This provision does not help his 
argument.  Naranjo assumes the reference to policies and 
procedures in this sentence refers to policies and procedures for 
issuing itemized statements of hourly rates, hours worked, and 
other required wage and employment-related information, 
based on correct legal judgments about whether certain disputed 
items fit into these categories.  Even if Naranjo’s reading were 
correct — a question we need not contend with here — this 
sentence does nothing more than identify one, nonexclusive 
factor for consideration in evaluating an employer’s compliance 
with section 226.  It does not purport to define the universe of 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
33 
matters a factfinder may take into account in deciding whether 
a failure to comply with section 226 is knowing and intentional.  
It thus does not undermine our conclusion that a court may also 
take into account whether the employer’s failure to comply with 
section 226’s requirements was the product of a reasonable, good 
faith misunderstanding of those requirements and their proper 
application.9 
 
9  
Naranjo also invokes Labor Code section 226.3, which 
states:  “In enforcing this section, the Labor Commissioner shall 
take into consideration whether the violation was inadvertent, 
and in his or her discretion, may decide not to penalize an 
employer for a first violation when that violation was due to a 
clerical error or inadvertent mistake.”  (Lab. Code, § 226.3 
(section 226.3), added by Stats. 1979, ch. 1050, § 3, p. 3703 and 
amended by Stats. 1992, ch. 424, § 1, p. 1554.)  It is not entirely 
clear how Naranjo thinks this provision helps his argument.  
Naranjo appears to be relying less on this provision than on a 
Court of Appeal decision he understands to have interpreted 
“inadvertent,” in this context, to exclude good faith legal 
mistakes.  But the decision in question, Heritage Residential 
Care, Inc. v. Division of Labor Standards Enforcement (2011) 
192 Cal.App.4th 75, did not so hold; it instead simply held that 
no such good faith defense had been made out under the 
circumstances of the case, which involved misclassification of 
employees as independent contractors.  (See id. at p. 88.)  In any 
event, as case law makes clear, section 226.3 is sufficiently 
different from section 226, subdivision (e)(1) that it would be 
hazardous to draw any firm conclusions about the meaning of 
one statute based on the other.  (Cf. Raines v. Coastal Pacific 
Food Distributors, Inc. (2018) 23 Cal.App.5th 667, 680 [“section 
226.3 clearly does not include the knowing and intentional 
requirement of section 226[, subd.] (e)”]; Gunther v. Alaska 
Airlines, Inc. (2021) 72 Cal.App.5th 334, 354–355 [reading the 
plain language of the statute to mean that section 226.3 
penalties are available only where the employer fails to provide 
wage statements or keep required records].) 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
34 
C. 
To the extent any ambiguity remains, we may consult the 
legislative history.  (See, e.g., People v. Smith (2004) 32 Cal.4th 
792, 797–798.)  The parties vigorously dispute what lessons to 
draw from that history.  We do not find the history to be 
particularly revealing, but what we can glean is consistent with 
the view that section 226, subdivision (e)(1) was not meant to 
punish good faith wage statement mistakes. 
The history behind the 1976 enactment of the penalty 
provision in section 226, subdivision (e)(1) is sparse and oblique.  
The parties focus on just two pieces of correspondence related to 
the passage of the legislation.  First, in a letter to the Governor 
supporting the bill, Alex Saldamando, counsel for bill sponsor 
California Rural Legal Assistance, stated that “[t]here are a 
number 
of 
employers, 
usually 
small 
growers, 
who 
systematically refuse to give wage stub information to their 
employees.  A number simply pay in cash, or pay by check 
without furnishing itemized statements.  One grower operating 
in Yuba County went as far as detaching the wage stub before 
giving the employee the paycheck.  Serious consequences for 
employees can result. . . .  The law should permit them to recoup 
their losses from an employer who knowingly and intentionally 
flaunts the law.”  (Alex Saldamando, California Rural Legal 
Assistance, letter to Governor Edmund G. Brown, Jr., Aug. 30, 
1976, p. 1, italics added.)  Saldamando also stated that employer 
interests had dropped their opposition to the bill after “we 
persuaded them that an employer who deliberately failed to 
provide wage information should be liable for the consequences 
of his or her act to an employee who had labored in good faith.”  
(Ibid.)   
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
35 
Second, in a different letter to the Governor, the bill’s 
sponsor in the Legislature, Assemblyman Bill Lockyer, similarly 
stated:  “I was surprised to learn that some employers 
consistently fail to provide [wage stub] information to their 
workers.  The sponsors of the bill, California Rural Legal 
Assistance, informed me that some growers make a practice of 
not providing an itemization of wages.”  (Assemblyman Bill 
Lockyer, sponsor of Assem. Bill No. 3731 (1975–1976 Reg. 
Sess.), letter to Governor Edmund G. Brown, Jr., Sept. 2, 1976.)   
These bits of legislative history are neither authoritative 
nor definitive.  But we have previously said that these sorts of 
“statements 
about 
pending 
legislation 
are 
entitled 
to 
consideration to the extent they constitute ‘a reiteration of 
legislative discussion and events leading to adoption of proposed 
amendments rather than merely an expression of personal 
opinion.’ ”  (Martin v. Szeto (2004) 32 Cal.4th 445, 450–451, 
quoting California Teachers Assn. v. San Diego Community 
College Dist. (1981) 28 Cal.3d 692, 700; cf. Cornette v. 
Department of Transportation (2001) 26 Cal.4th 63, 72 
[considering similar evidence when “the purpose of the 
legislation was best explained by its author in a letter to the 
Governor urging him to approve it”]; Larkin v. Workers’ Comp. 
Appeals Bd. (2015) 62 Cal.4th 152, 164, fn. 10 [“While there are 
often limits to what an interpreter may reasonably infer from 
an individual legislator’s letter [citation], we have considered 
letters expressing the views of a bill’s sponsor where those views 
are fully consonant with the statutory language and the history 
of the legislation”]; but see People v. Wade (2016) 63 Cal.4th 137, 
143 [“ ‘[T]he statements of an individual legislator, including the 
author of a bill, are generally not considered in construing a 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
36 
statute, as the court’s task is to ascertain the intent of the 
Legislature as a whole in adopting a piece of legislation’ ”].)   
Here, the statements suggest that the intent behind the 
penalty provision was to punish those who knowingly and 
intentionally flouted the law by “deliberately fail[ing] to provide 
wage information” to their employees.  The available legislative 
history contains no suggestion that the Legislature intended for 
the same provision to punish those who make good faith 
mistakes about what the law requires. 
D. 
Naranjo raises concerns that excusing employers from 
section 226 penalties based on good faith mistakes of law will 
excuse and even incentivize ignorance of the law.  These 
concerns are unfounded.   
As a general rule, where the law is clear and thus can 
easily be ascertained, knowledge of the law may be fairly 
imputed to an employer.  (Cf., e.g., Marshall v. A & M 
Consolidated Independent Sch. (5th Cir. 1979) 605 F.2d 186, 191 
[“actual awareness of the law is unnecessary to establish 
willfulness.  Knowledge is imputed”].)  Moreover, courts that 
have evaluated employers’ good faith when determining 
whether to award waiting time penalties under section 203 have 
uniformly focused on whether the employers’ basis for disputing 
liability was objectively reasonable.  In Barnhill, for example, 
the Court of Appeal emphasized the “uncertainty,” underscored 
by conflicting case law, about whether an employer had the right 
to set off an employee’s debt against wages due on separation.  
(Barnhill, supra, 125 Cal.App.3d at p. 8.)  More recently, the 
Court of Appeal concluded that the trial court correctly declined 
to award penalties when the employer’s legal obligations under 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
37 
a living wage ordinance were “unclear,” and the employer 
offered in good faith arguments that, although ultimately 
adjudged incorrect, were not “unreasonable or frivolous.”  
(Amaral, supra, 163 Cal.App.4th at p. 1202; see id. at pp. 1202–
1204.)   
On the flip side, the Court of Appeal has affirmed trial 
courts’ findings that the employer lacked a good faith belief in 
the legality of its actions when the employer’s position was 
clearly erroneous or based on an unexcused failure to ascertain 
the law.  (See, e.g., Road Sprinkler Fitters Local Union No. 669 
v. G & G Fire Sprinklers, Inc., supra, 102 Cal.App.4th at p. 782 
[affirming trial court’s award of section 203 penalties when the 
employer’s classification of employees as pipe tradesmen rather 
than sprinkler fitters was clearly erroneous and therefore not 
reasonable]; Diaz, supra, 23 Cal.App.5th at p. 869 [affirming 
trial court’s award of penalties when the employer negligently 
failed to inquire into living wage increases under an amended 
ordinance].)   
Because 
courts 
already 
evaluate 
an 
employer’s 
misunderstanding of legal requirements against a standard of 
objective reasonableness, there is little reason to worry that 
recognizing a good faith defense to section 226 wage statement 
penalties will create adverse incentives for employers.  As the 
Ninth Circuit recently concluded after examining our appellate 
courts’ application of the good faith defense to section 203 
penalties, the defense does not “reward ignorance of the law”; it 
only means that penalties will be imposed on “employers who 
lack a good excuse” while employers who face genuine legal 
uncertainty and make mistakes of law that are reasonable and 
supported by evidence will be spared.  (Hill v. Walmart Inc. (9th 
Cir. 2022) 32 F.4th 811, 816.)  Allowing a good faith defense in 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
38 
cases where the employer’s obligations are genuinely uncertain 
“amply serves the balance struck by the applicable statutes and 
regulations between incentivizing prompt payment of wages 
and shielding innocent mistakes from penalties.”  (Id. at p. 817.)  
The same is true of the balance struck in the wage statement 
law. 
E. 
To sum up:  We hold that an employer’s objectively 
reasonable, good faith belief that it has provided employees with 
adequate wage statements precludes an award of penalties 
under section 226, subdivision (e)(1).  An employer that believes 
reasonably and in good faith, albeit mistakenly, that it has 
complied with wage statement requirements does not fail to 
comply with those requirements knowingly and intentionally. 
That conclusion provides a complete answer to the issue 
as it arises in this case.  The trial court awarded section 226 
penalties to Naranjo based on its conclusion that Spectrum’s 
wage statement violations were “not inadvertent” and therefore 
must have been “knowing and intentional” within the meaning 
of that provision.  Reversing the trial court, the Court of Appeal 
concluded that because Spectrum had, in fact, disputed its 
liability reasonably and in good faith, Spectrum cannot be held 
liable for penalties under section 226.  The Court of Appeal was 
correct.  
There is no genuine question that Spectrum had a 
reasonable, good faith basis for believing it was complying with 
California wage and hour law.  Over the more than 15 years this 
case has been pending, Spectrum has succeeded with its legal 
defenses more than once — even though the decisions in its 
favor would later be overturned on appeal.  The trial court 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
39 
agreed with Spectrum that its defenses in the first phase of the 
trial would have precluded the class from any recovery at all and 
“were presented in good faith and were not unreasonable or 
unsupported by the evidence.”  The trial court concluded that 
there was at least some uncertainty, given Spectrum’s role as a 
federal security contractor, whether California wage laws and 
wage orders applied to Spectrum officers at all.  At the very 
least, the trial court concluded that the issue was not so clear 
cut 
that 
Spectrum’s 
defenses 
were 
unreasonable 
or 
unsupported.  The trial court’s good faith finding implies that it 
found Spectrum’s legal positions reasonable, if ultimately 
unconvincing.  That is to say, the trial court was persuaded that 
Spectrum’s mistaken belief that it did not owe employees 
premium pay for missed meal breaks was more than mere 
ignorance; it was supported by evidence and reasonable legal 
arguments.  There is also no record evidence that Spectrum 
acted in bad faith or knowingly and intentionally omitted 
premium pay from wage statements.  The Court of Appeal 
affirmed the trial court’s good faith finding and Naranjo has not 
renewed his challenge to that finding.  
Whether premium pay for missed meal breaks should be 
reported on wage statements as “wages earned” and missed 
breaks credited as “hours worked” was also an unsettled legal 
issue when this case was tried.  Recall that Spectrum’s section 
226 liability here is derivative of its section 226.7 liability:  
Because Spectrum did not pay its employees all of the wages 
that they were owed when it failed to compensate them for 
missed meal breaks, Spectrum’s itemized wage statements were 
inaccurate insofar as they failed to include all of the wages that 
employees were owed.  (Naranjo III, supra, 13 Cal.5th at p. 121.)  
During the final phase of the trial, Spectrum argued that section 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
40 
226 penalties were not available in this case because premium 
pay is itself a penalty for failure to comply with section 226.7’s 
meal break requirements, not a wage that must be reported on 
a wage statement.  Section 226 does not include missed-break 
premium pay among the categories of information that must be 
included in wage statements.  (See § 226, subd. (a).)  A number 
of federal district courts had concluded that meal premiums did 
not need to be reported as wages when this case was tried in 
2013.  (See, e.g., Nguyen v. Baxter Healthcare Corp. (C.D.Cal., 
Nov. 28, 2011, No. 8:10-cv-01436-CJC (SSx)) 2011 WL 6018284 
at p. *8 [rejecting — and noting the lack of support for — “the 
proposition that meal period premiums must be included in an 
employee’s wage statement”]; accord, Jones v. Spherion Staffing 
LLC (C.D.Cal., Aug. 7, 2012, No. LA CV11-06462 JAK (JCx)) 
2012 WL 3264081 at p. *8 [“Plaintiff cannot advance a claim for 
noncompliant wage statements pursuant to section 226[, subd.] 
(a) or failure to pay wages due upon termination pursuant to 
section 203 based solely on alleged violations of section 226.7”]; 
cf. Finder v. Leprino Foods Co. (E.D.Cal., Mar. 12, 2015, 
No. 1:13-CV-2059 AWI-BAM) 2015 WL 1137151 at pp. *4–*5 
[reaching the opposite conclusion while noting disagreement 
among federal courts on the issue and the lack of state court 
appellate authority].)  No appellate court in California had 
addressed the issue at the time.   
Nor was it clear then that section 226 penalties are 
available in cases where the section 226 claims are based on 
underlying wage violations and the wage statements reflected 
employees’ actual work hours and compensation.  Nearly five 
years after the trial here, the Court of Appeal concluded, as a 
matter of first impression, that wage statements that “correctly 
reflected the hours worked and the pay received” were accurate 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
41 
and lawful under section 226 even though the employer had 
failed to pay overtime at an appropriate rate after improperly 
adopting an alternative workweek schedule.  (Maldonado v. 
Epsilon Plastics, Inc. (2018) 22 Cal.App.5th 1308, 1337 [“That 
the [alternative workweek schedule] ultimately turned out to be 
invalid mandates that the employees receive unpaid overtime, 
interest, and attorney’s fees,” but “[i]t does not mandate that 
they also receive penalties for the wage statements which 
accurately reflected their compensation under the rates at 
which they had worked at the time”]; see id. at pp. 1334, 1336–
1337 & fn. 15; see also Soto, supra, 4 Cal.App.5th at pp. 392–
393 [“an employer is required to identify only those statutory 
items that are part of the employee’s current monetary 
compensation.  The employer must provide the employee with 
an itemized statement identifying the specific wages being paid 
at the time of the payment” (italics added)].)  Even then, it was 
unclear whether wage statements that did not report earned but 
unpaid wages were accurate — whether an employer that failed 
to compensate employees adequately also violated section 226 
when wage statements reflected the actual but unlawful rate at 
which those employees were paid.   
The Court of Appeal here was the first to consider whether 
missed-break meal premiums must be reported on wage 
statements.  It agreed with Spectrum that section 226.7 
premium pay does not need to be reported as an employee’s 
“wages earned” or “hours worked” in wage statements and held 
that such penalties were unavailable here as a matter of law.  
(See Naranjo II, supra, 40 Cal.App.5th at p. 474.)  We took up 
review of that issue to correct the “confusion” among federal 
district courts and the Courts of Appeal about the availability of 
section 203 and section 226 penalties derivative of unpaid and 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
42 
unreported missed-break meal premiums, and we reversed in 
part the judgment of the Court of Appeal.  (Naranjo III, supra, 
13 Cal.5th at p. 104; see also id. at p. 121 [noting “a split of 
authority has developed among the many federal district court 
cases to consider the question”].)  Rejecting the reasoning in 
extant appellate cases, we held that “failure to report premium 
pay for missed breaks can support monetary liability under 
section 226 for failure to supply an accurate itemized statement 
reflecting an employee’s gross wages earned, net wages earned, 
and credited hours worked” — even if meal premiums were not 
paid.  (Id. at p. 121.)   
Before our 2022 decision, it was uncertain whether 
Spectrum had violated section 226.  The question whether wage 
statements must include premium pay for missed meal breaks, 
even if unpaid, was complex and debatable.  (Cf. City of Ontario 
v. Superior Court (1970) 2 Cal.3d 335, 345 [under Code Civ. 
Proc., § 473, “an honest and reasonable mistake of law on [a 
“ ‘complex and debatable’ ”] issue is excusable”]; accord, 
McCormick v. Board of Supervisors (1988) 198 Cal.App.3d 352, 
362 [“where the law is not yet established attorneys cannot be 
expected to be omniscient”].)  Given the uncertainty and 
confusion, it was not objectively unreasonable for Spectrum to 
believe, in the period between June 2004 and September 2007, 
that it had no obligation to report meal premiums as wages.  
Imposing liability under these circumstances would penalize 
Spectrum not for failing to apprise itself of its obligations, but 
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
43 
for failing to predict how unsettled legal issues would be 
resolved many years down the line.10  
In short, the Court of Appeal in this case correctly 
concluded that when an employer shows that it reasonably and 
in good faith, albeit mistakenly, believed that it complied with 
section 226, subdivision (a), that employer’s failure to comply 
with wage statement requirements is not “knowing and 
intentional,” and the employer is therefore not subject to 
penalties under section 226, subdivision (e)(1).  Here, the trial 
court found that Spectrum argued in good faith that it did not 
fail to comply with California meal break requirements.  
Moreover, whether unpaid premiums for missed meal breaks 
must be reported as “wages earned” and credited as “hours 
worked” in wage statements was uncertain until we settled the 
issue in 2022.  Given these legal uncertainties, Spectrum’s 
failure to include unpaid meal premiums in its employees’ wage 
 
10  
In his reply brief, Naranjo argues for the first time that 
Spectrum’s failure to issue compliant wage statements was the 
product of simple ignorance of the law, not the product of any 
considered judgment about what the law requires.  Naranjo 
points out that John Oden, Spectrum’s Vice President and 
Personnel Manager, testified at trial that he was not familiar 
with any applicable wage orders before Naranjo filed this 
lawsuit.   
We need not address this belatedly raised argument, 
which calls into question the very premise of the question 
Naranjo raised for this court’s review:  namely, whether 
Spectrum’s good faith belief it was in compliance precludes the 
imposition of section 226 penalties.  But the argument based on 
Oden’s professed unfamiliarity with the wage orders fails in any 
event.  As our discussion makes clear, Naranjo’s claims raised 
several complex and previously unsettled legal questions, the 
answers to which do not turn on the content of the wage orders.  
NARANJO v. SPECTRUM SECURITY SERVICES, INC. 
Opinion of the Court by Kruger,  J. 
 
44 
statements from June 2004 to September 2007 was not 
“knowing and intentional” within the meaning of section 226, 
subdivision (e)(1).11   
III. 
The judgment of the Court of Appeal is affirmed.   
 
 
 
 
 
 
    KRUGER, J. 
 
We Concur: 
EVANS, Acting C. J. 
CORRIGAN, J. 
LIU, J. 
GROBAN, J. 
JENKINS, J. 
RODRIGUEZ, J.* 
 
11  
We disapprove the following cases to the extent they are 
inconsistent with this opinion:  Gola v. University of San 
Francisco, supra, 90 Cal.App.5th 548; Furry v. East Bay 
Publishing, LLC, supra, 30 Cal.App.5th 1072; Kao v. Holiday, 
supra, 12 Cal.App.5th 947.  
* 
Associate Justice of the Court of Appeal, First Appellate 
District, Division Three, assigned pursuant to article VI, section 
6 of the California Constitution. 
 
 
See next page for addresses and telephone numbers for counsel who 
argued in Supreme Court. 
 
Name of Opinion  Naranjo v. Spectrum Security Services, Inc. 
__________________________________________________________  
 
Procedural Posture (see XX below) 
Original Appeal  
Original Proceeding 
Review Granted (published) XX 88 Cal.App.5th 937 
Review Granted (unpublished)  
Rehearing Granted 
__________________________________________________________  
 
Opinion No. S279397 
Date Filed:  May 6, 2024 
__________________________________________________________  
 
Court:  Superior  
County:  Los Angeles 
Judge:  Barbara Marie Scheper 
__________________________________________________________   
 
Counsel: 
 
Rosen Marsili Rapp, Howard Z. Rosen, Jason C. Marsili and Brianna 
Primozic Rapp for Plaintiffs and Appellants. 
 
Gusdorff Law and Janet Gusdorff for California Employment Lawyers 
Association as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
Duane Morris, Robert D. Eassa, Paul J. Killion, Eden E. Anderson, 
Sarah A. Gilbert; Tremblay Beck Law and David Carothers for 
Defendant and Appellant.  
 
Munger, Tolles & Olson, Benjamin J. Horwich, Aimee Feinberg and 
Maggie H. Thompson for Chamber of Commerce of the United States of 
America and the California Chamber of Commerce as Amici Curiae on 
behalf of Defendant and Appellant. 
 
Quarles & Brady, George S. Howard, Jr., Jeffrey P. Michalowski and 
Adrielli Ferrer for Employers Group and the California Employment 
Law Counsel as Amici Curiae on behalf of Defendant and Appellant.
 
 
Counsel who argued in Supreme Court (not intended for 
publication with opinion):  
 
Jason C. Marsili 
Rosen Marsili Rapp LLP 
11150 West Olympic Boulevard, Suite 990 
Los Angeles, CA 90064 
(213) 389-6050 
 
Paul J. Killion 
Duane Morris LLP 
Spear Tower, One Market Plaza, Suite 2200 
San Francisco, CA  94105-1127 
(415) 957-3000