Attorneys for workers argued that employees weren't getting required breaks and employers were overlooking it.
But the high court ended up siding with businesses, saying requiring companies to order breaks is unmanageable, and it should be left up to workers to take their breaks.
The decision is a relief for restaurant owners like Mark Platt, who owns Land Ocean and Sienna. He found it tough to balance customers' needs and employee breaks mandated after a five-hour shift.
"'You really spend your whole shift baby-sitting, making sure that these people have gotten their breaks," Platt said.
The case was initially filed nine years ago against Brinker International, the parent company of Chili's and other eateries, by restaurant workers complaining of missed breaks in violation of California labor law.
Labor unions are now concerned people giving up rest periods are risking their health and sometimes safety - and may create a situation that will pit worker against worker.
"If one is willing to work without breaks, and one needs that time to rest from physical labor or other kinds of jobs, which worker is going to get the preference? Which worker is going to be promoted? Which worker is going to get the raise?" said Caitlin Vega of the California Labor Federation.
But California companies say the high court's decision will provide a better business climate in this state, where workers were constantly suing for break violations.
"We are hoping that this ruling will put an end to the frivolous lawsuits that have been plaguing California employers regarding the meal and rest breaks," said Erika Frank of the California Chamber of Commerce.
Restaurant server Jessica Hardy likes the flexibility of determining the timing of her own breaks. She often feels bad about leaving her customers when she has to take a mandatory rest period.
"It's impossible to have to walk away from a table. You feel like you've abandoned them. You feel like you did a poor job," she said.
Workers' attorneys believe abuses will be routine and widespread when companies are not required to issue direct orders to take breaks.
The Associated Press contributed to this report.