California Governor Signs Piece-Rate Compensation Bill Into Law

By XobeeAdmin on October 12, 2015 in Legal Update
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AB 1513 Requires Separate Compensation of Breaks and Nonproductive Time for Piece-Rate Workers

On October 10, 2015, Governor Brown signed AB1513, which expresses statutory requirements for piece-rate compensation and provides an affirmative defense for employers facing lawsuits based on wage and hour violations for piece-rate workers. In 2013, two California Courts of Appeal held that the California requirement that “all hours worked” be paid at no less than the minimum wage means piece-rate workers must be separately compensated for rest breaks and other time and task spent not directly producing pieces. AB1513, effective January 1, 2016, codifies the pay requirements for piece rate workers issued by the appellate courts and makes other changes. It also repeals three obsolete workers’ compensation study requirements from the Labor Code.

The new law will require employers to compensate piece-rate employees for rest and heat illness recovery periods (“R&R”) and for “other nonproductive time” (“NPT”) separately from their piece-rate earnings. Time spent during R&R and NTP must be paid at rates specified in the law, and employers must designate the time and rate(s) of pay on the employees’ check stubs. Employers that fully compensate their employees by December 15, 2016 for all under-compensated or uncompensated rest periods, recovery periods, or NPT between July 1, 2012 and December 31, 2015 will benefit from the safe harbor provisions.

Here are some of the key points of AB 1513:

– R&R and NPT time must be compensated separately from piece-rate pay. R&R must be paid using a modified regular rate of pay calculation that excludes R&R from the total workweek hours (or the applicable minimum wage, if higher). NPT must be paid at not less than the applicable minimum wage.
– NPT is defined as “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 bases,” which may include things like donning and doffing uniforms, attending safety meetings or trainings, and compensable travel time.
– Itemized wage statements must state the total hours, rate(s) of pay, and gross wages for R&R and NPT (separately) during the pay period.
– Creates an affirmative defense to any claim or lawsuit for recovery of wages, damages, liquidated damages, statutory penalties, or civil penalties based solely on the employer’s failure to timely pay R&R and NPT separately from other piece-rate compensation between July 1, 2012 and December 31, 2015 if employees are fully paid no later than December 15, 2016 and notice is given to the state.