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Assembly Bill 1513 (Hourly Pay for Rest and Recovery Periods for Piece-Rate Workers)
Over the last few years several courts have found that California’s minimum wage law applies to the “non-productive” time spent by employees who are paid on a piece rate basis. For employee truck drivers, this “non-productive” time might be pre- and post-inspections or fueling time as well as paid rest periods. AB 1513 codifies these rulings. The new law makes it harder to maintain piece-rate pay systems by adding a lot of administrative headaches.
Under this system, if you have employee drivers who get paid by piece rate, you need to track their piece rate compensation, their non-productive hours, and their rest and recovery periods and pay them for each type of work. (A “recovery period” means a cool-down period given to an employee to prevent heat illness.) Each type of pay has to appear on their pay stub with the units of pay, the rate of compensation, and the gross wages for that type of pay.
For “nonproductive time,” other than rest and recovery periods, piece-rate workers must be paid an hourly rate that is no less than the applicable minimum wage for all such time as determined either through the employer’s actual records or its reasonable estimate of this time.
Where it gets more complicated is the calculation for rest period pay. The new law requires that for rest and recovery periods, piece-rate workers must receive an hourly rate of pay no less than the higher of:
- an average hourly rate determined by dividing the total compensation for the workweek, exclusive of compensation for rest and recovery periods and any premium compensation for overtime, by the total hours worked during the workweek, exclusive of rest and recovery periods; or
- the applicable minimum wage.
In almost all cases involving truck drivers, the first approach, average hourly rate, will apply. This means that to figure out the hourly rate for rest periods, a new calculation has to be done each week independently for each employee driver. This is going to add complexity to the payroll calculations of employers.
The new law also has certain technical adjustments to this pay structure based on how often employees are paid and there is a limited phase-in period for certain publicly-traded companies. For everyone else, this starts January 1, 2016.
AB 1513 also provides a safe harbor from a civil action for unpaid wages based on rest and recovery periods and other nonproductive time prior to and including December 31, 2015, if, by December 15, 2016, the employer makes payments to each of its employees for previously uncompensated or under-compensated rest and recovery periods and other nonproductive time for the period July 1, 2012, to December 31, 2015, using one of two specified formulas., either the actual amount owed based on records or 4% of each current and former employees gross earnings during those two and a half years. There are a couple of requirements needed to comply with the safe harbor and you really need to follow the statute carefully to understand it.
Also note that the safe harbor is a defense to the claim that the employer did not compensate employees for rest and recovery periods that must be paid, it does expressly protect against claims based on the employer’s alleged failure to provide such breaks.
AB 1513 is codified as California Labor Code section 226.2.