Payroll errors force Jack in the Box into wage class retrial

The total overcharge across all employees came to roughly $22,000. No single worker lost more than $32. About half the class lost less than $2 over the entire eight-year period. But at trial, a jury awarded $5,307,589.60 in penalty wages. The penalty was calculated on $13,468.37 in overdeductions that fell within the statute of limitations – meaning the award was nearly 400 times the compensable harm. The Ninth Circuit flagged that ratio as a potential due process problem and told the district court to take a harder look at it if penalty wages come up again on remand. 

The panel also reversed the district court’s finding that the overdeductions were willful, which is a prerequisite for penalty wages under Oregon law. Jack in the Box testified through depositions that it did not know about the error until 2012, and the plaintiffs offered no testimony to the contrary. The court found that a reasonable jury could believe the company simply missed a tiny deduction managed by automated software and that relying on a payroll system to handle the math was not inherently careless. Still, the court did not let Jack in the Box off the hook entirely. Because the company admitted it received updated rates from the state each year and correctly adjusted the total amount it paid Oregon, a jury could reasonably wonder why it never did the same for its employees. 

The meal break ruling may carry the broadest implications for HR professionals. Jack in the Box employees on shifts longer than six hours typically took unpaid 30-minute meal periods. When business was heavy, management would call workers back before their breaks ended. Company policy treated any break of at least 20 minutes as a full meal period and did not pay for it. So an employee whose break was cut from 30 to 25 minutes got paid for the five minutes of work but nothing for the 25 minutes of interrupted break time. 

The district court had refused to certify a class on these claims, reasoning that each shortened break required an individualized look at why the employee came back – whether they were ordered to return or chose to on their own. The Ninth Circuit rejected that distinction. Under Oregon law, as interpreted by the state Court of Appeals in Maza v. Waterford Operations (2019), the reason does not matter. Employers are responsible for enforcing 30-minute meal breaks. If a break falls short, the employer owes wages for the entire 30 minutes, regardless of who cut it short. 

Jack in the Box argued that this rule should only apply going forward from 2019, since it had no Oregon employees by then. The Ninth Circuit disagreed, holding that Maza interpreted existing regulatory language that was in place well before 2010. The court also relied on a 2025 Oregon Court of Appeals decision, Athena v. Pelican Brewing Co., which concluded that the 2010 amendment to Oregon’s meal break regulation did not change the substance of the rule – it simply spelled out what was already required. Employees who did not receive a full 30-minute break were working for wage and hour purposes and were entitled to pay during that time.