Piece-Rate Employees Back Pay Election Deadline of July 1

Jun 28 2016 - Compensation - Gail Cecchettini Whaley

Piece Rate Back Pay Notice DIR

Piece-rate employers wanting to take advantage of the safe harbor penalty relief must file notice by July 1.

Over the past several years, California courts have been addressing the issue of compensating piece-rate workers for non-piece-rate time, such as rest breaks or other non-productive time that is not being spent producing a product or completing a task.

Last year, California’s Legislature stepped in, passing a new law which specifically addresses the issue of compensating piece-rate workers for non-piece-rate time and expands on existing court decisions. The Legislature passed AB 1513, adding section 226.2 to the Labor Code.

The law requires employers to pay piece-rate workers for rest and recovery periods and other non-productive time at specified minimum hourly rates. This compensation must be separate from the piece-rate compensation. The law includes a definition of “other non-productive time.”

Importantly, the law creates a way for employers who, in the past, may not have properly paid piece-rate workers to fully compensate these employees through back wage payments in exchange for relief from liability. Employers who make the back payments and meet other statutory requirements will have a legal defense to claims for damages or other penalties associated with any alleged prior failure to pay what was due.

For employers that are electing to participate, back payments are required for the time period of July 1, 2012 through December 31, 2015, and must be paid no later than December 15, 2016.

Employers with piece-rate workers who have concerns regarding whether they properly paid workers in the past for rest and recovery periods or other non-productive time must file notice with DIR by July 1 of their intent to make back payments to take advantage of the affirmative defense that is created by statute.

Labor Commissioner Julie A. Su is encouraging employers to take advantage of this safe harbor penalty relief.

As a best practice, consult legal counsel with any questions on how to take advantage of this defense.

Gail Cecchettini Whaley, CalChamber Employment Law Counsel/Content

CalChamber members can read more on Piece Rate Pay in the HR Library. Not a member? See how CalChamber can help you.

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