In California, how piece-rate workers should be compensated during mandated rest and recovery periods and other work time that does not generate piece-rate earnings has been the subject of controversy and legal battles. A new California law (AB 1513) goes into effect January 1, 2016, that is intended to clarify and settle the pay requirements for mandated rest and recovery breaks and “other nonproductive time” going forward. It also provides a short window of time for employers to make back wage payments to workers for rest and recovery breaks and other nonproductive time to avoid statutory penalties and other damages.
What does piece-rate mean?
Piece-rate or “piece work” is defined as “work paid for according to the number of units turned out.” Examples of piece-rate plans include:
- Automobile mechanics paid on a “book rate”;
- Nurses paid on the basis of the number of procedures performed;
- Carpet layer paid by the yard of carpet laid;
- Technician paid by the number of telephones installed;
- Factory worker paid by the widget completed;
- Carpenter paid by the linear foot on framing job.
It does not apply to employees that work on a commission basis.
How is nonproductive time paid?
Under the new law,
- Employees must be compensated for rest and recovery periods or other nonproductive time separate from any piece-rate compensation. An employer may not treat the piece-rate compensation as including compensation for rest and recovery periods or other nonproductive time.
- Rest and recovery periods must be paid at an hourly rate no less than the greater of either the applicable minimum wage or the employee’s average hourly wage for all time worked (exclusive of break time) during the work week.
- Compensation for other nonproductive time (“time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis”) must be paid at an hourly rate of no less than the applicable minimum wage.
Employee wage statements will be required to include the following information, in addition to that which is already required under existing Labor Code section 226(a):
- The total hours of compensable rest and recovery periods, the rate of compensation for those periods, and the gross wages paid for those periods during the pay period.
- The total hours of other nonproductive time, the rate of compensation for that time, and the gross wages paid for that time during the pay period, unless the employer in addition to piece-rate compensation pays the applicable minimum wage.
Employers will have 11½ months to make back payments to their employees for previously unpaid or underpaid rest and recovery breaks and other nonproductive time if they meet certain requirements. More information about AB 1513 is available from the California Department of Industrial Relations here.