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New rules: Minimum wage for piece-rate workers in California

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in Compensation and Benefits,Human Resources

Under a law that took effect in Jan­uary, piece-rate and commission-paid employees in California must receive at least the minimum wage. Piece-rate employees must also be paid at least the minimum wage for all time spent on tasks not specifically included in the piece rate.

AB 1513 requires paying piece-rate employees for rest and recovery periods and other nonproductive time separate from any piece-rate compensation. The law defines “other nonproductive time” as “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.”

The law also requires paying piece-rate employees separately for rest and recovery periods at a regular hourly rate that is 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

• The applicable minimum wage rate.

Additionally, employers must pay employees for “other nonproductive time” at an hourly rate that is not less than the applicable minimum wage.

Key takeaways: AB 1513 effectively bans the use of piece-rate pay as many California employers have come to know it. Unlike federal law, which permits averaging piece-rate hours with other uncompensated hours to satisfy minimum wage pay requirements, AB 1513 bans averaging.

Employers in the transportation, construction and agricultural industries are likely to be the hardest hit and may wish to consult an attorney to determine their compliance options.

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