On January 1, 2016 California business owners face a host of new laws that go into effect on the first day of the New Year (such as the Fair Pay act, more on that here). One of them is AB 1513, which creates a new California Labor Code § 226.2 and rewrites and redefines the rules governing piece-rate compensation in California. Employees who are paid piece rates and commission payments are paid by results instead of getting an hourly or weekly pay rate. In other words, what a “piece rate” employee earns each week will vary depending on how much work they do. One of the largest industries in California affected by this new law is the automotive industry, though any business with piece rate employees on the payroll must take this new law into consideration.
Auto dealers and all employers paying employees on a piece-rate basis must:
1. Separately compensate employees for time spent taking rest breaks.
2. Separately compensate employees for “other nonproductive time.”
3. Provide additional relevant information on required wage statements.
Under the new law, “other nonproductive time” is considered time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on the piece-rate basis and must be compensated at a rate not less than the applicable minimum wage.
When it comes to piece-rate employee pay stubs, wage statements must include:
· the hours spent on rest breaks,
· the rate paid for such rest breaks,
· the gross wages paid for such rest breaks,
· hours spent on “other nonproductive time,”
· the rate paid for such “other nonproductive time,” and
· the gross wages paid for such “other nonproductive time.”
What does this mean for California Employers?
In light of Labor Code § 226.2, all employers paying employees on a piece-rate basis must take a close look at current payroll practices. For more information on how to successfully navigate this new piece of legislation, please contact experienced business lawyer Drew E. Pomerance today.
