San Diego Based Attorneys Serving Employers and Businesses

Recent changes to California’s Labor Code can make it very difficult for an employer to pay employees on a “piece-rate” basis.  The new laws took effect January 1, 2016 and require California employers to pay “piece-rate” employees for “rest and recovery periods” as well as all other periods of “nonproductive” time.  This compensation must be provided separately from and on top of an employee’s piece-rate pay.

The law provides payment for the following elements:

Rest and Recovery Periods:  California employers must pay piece-rate employees at an average hourly rate.  This is determined by dividing the total compensation for the pay period (excluding pay for rest, recovery periods and overtime premiums) by the total hours worked by the employee during the pay period (again excluding rest and recovery periods).

Nonproductive Time: California employers must pay piece-rate employees for nonproductive time at a rate that is no less than the established minimum wage ($10.50 per hour here in San Diego).  If you, as an employer, pay your piece-rate employees for all hours they work (in addition to their piece-rate compensation) you are not required to pay additional compensation (above the hourly rate) for nonproductive time.

Changes to the Piece-Rate Employee’s Itemized Wage Statement

California employers are required to provide all standard categories of wage statement information, as well as the following:

  • Total Hours of Rest and Recovery Periods For Which Compensation is Paid
  • The Rate of Payment for Rest and Recovery Periods
  • Gross Wages Paid for Rest and Recovery Periods for the Pay Period

If a California employer does not provide a separate hourly rate for all hours worked by piece-rate employees (in addition to their piece-rate wages), then the employer must list the following information on the employees wage statement:

  • Total Hours of Nonproductive Time
  • Rate of Compensation for Nonproductive Time
  • Gross Wages Paid for Nonproductive Time for the pay Period

Filing for “Safe Harbor”

The California Division of Labor Standards Enforcement has provided a new form for employers to submit to the Division by July 1, 2016 if the employer wishes to qualify for the “Safe Harbor” affirmative defense.  The “Safe Harbor” provides protection to the employer against claims for “wages, damages, and penalties” for previous failure to pay their employees for rest and recovery, and nonproductive time for the period covering July 1, 2012 through December 31, 2015.  To receive the “Safe Harbor” legal defense, the employer must calculate all unpaid compensation for their piece-rate employees for the period above, and complete payment of these back wages to all current and former affected employees by December 15, 2016.

San Diego Litigation Defense and Employment Lawyers for Piece-Rate Employers

Do you pay employees a piece-rate?  Should you elect to qualify for and submit “Safe Harbor” forms?  The Watkins Firm has advised California employers for decades.  We provide our clients with contracts, employment agreements, and associated policies and procedures to help ensure compliance with all Federal, State and local employment laws.  If you have paid employees on a piece-rate basis and are concerned about the impact of new regulations, or have questions about “Safe Harbor” we invite you to contact us or call 858-535-1511 for a complimentary and substantive consultation.