Changes to Compensation Structure for Piece-Rate Workers
AB 1513 requires employers of piece-rate workers to provide separation compensation for rest and recovery time, and to separate compensation for other non-productive time. A specific formula is provided in AB 1513 used to set the amounts of compensation.
Under the formula, employees have to be paid at least the higher of their average hourly rate or the applicable minimum wage for rest and recovery periods. When calculating the average hourly rate an employee would be paid for rest and recovery, the rest and recovery compensation plus the overtime premium compensation is subtracted from total workweek compensation and the resulting number is divided by total work hours minus the hours classified as rest and recovery periods. For all other non-productive time that an employee is paid for, the minimum compensation is the applicable minimum wage. The result of this change is employees may receive a higher amount of compensation for rest and recovery periods if their average hourly wage is higher than the applicable minimum wage.
Employers must also change pay stubs to provide an itemized wage statement detailing the hours worked, the rate of compensation, and the gross wages paid related to each of the different categories of nonproductive time and rest and recovery periods.
Employers must immediately change their payment practices so they are in full compliance with AB 1513. A reprogramming of payroll systems may become necessary to make it possible for employers to switch back and forth between average hourly rates and minimum wages depending upon the performance of an employee. Employers may also wish to consider evaluating their time-tracking system to ensure there is a detailed record of rest and recovery periods and other non-productive time so the correct payments can be calculated for workers.
If employers fail to follow all requirements created by AB 1513, they may be subject to wage and hour lawsuits brought by employees who receive less compensation than they are entitled to by law. The law creates a limited safe harbor for employers and allows them to raise affirmative defenses to wage and hour lawsuits if they did not pay piece-rate employees sufficiently for rest and recovery and other nonproductive time before March of 2014; however, the safe harbor provides no protection for claims for unpaid wages, damages, and penalties accruing after January 1.
Employees should make sure their pay stubs detail the appropriate compensation amount and should take legal action to recover unpaid wages if their employer fails to pay as required by the new California labor law.
Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 949.375.4734.
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