New Law On Piece Rate Compensation Requires Separate Pay For Rest Breaks

piece-rate employee in CaliforniaEffective January 1, 2016, employees compensated on a piece base basis have an additional important right  – to be paid for their meal an rest breaks separately and in addition to any piece rate compensation they are otherwise entitled to. This law is codified in Labor Code 226.2.

What is Piece-Rate Compensation?

Per Labor Code 226.2 defines piece rate compensation as work paid for according to the number of units turned out. Here are some of the common examples of piece-rate plans:  automobile mechanics paid a “book rate” per job; nurses paid on the basis of the number of procedures performed; carpet layers paid by the yard of carpet laid; technicians paid by the number of telephones installed; factory workers paid by the widget competed; and carpenters paid by the linear foot on framing jobs. A piece-rate plan may include a group of employee who share in the wage earned for completing the task of making the product. This law does not apply to employees who work on a commission basis.

Labor Code 226.2 and Overtime Pay

This law expressly states that it “hall not be construed to limit or alter minimum wage or overtime compensation requirements”. This means that in any workweek in which a piece-rate employee worked overtime hours, overtime compensation must be calculated and paid according to existing law.

Key Changes Affecting Rest Breaks And Recovery Breaks Pay 

Section 226.2(a)(1) and (3) provide that employees must be compensated for rest and recovery periods separate from any piece rate pay. This means that an employer may not treat the piece rate compensation as including compensation for rest breaks, no matter how the piece-rate is determined. The hourly rate for compensation for these breaks must be the same as the hourly rate (on average) that an employee earned during the workweek for time during which he was performing work.

Compensation For “Other Non Productive Time”

The law defines “other non productive time” in the context of piece rate employment as time under the employer’s control, exclusive of rest breaks and recovery periods, that is not directly related to the activity being compensated on a piece rate basis. An example would be a car mechanics who is answering a phone call between performing jobs for which he is paid on a peace rate basis, or simply hanging out and waiting for the next customer without being on a rest break. The law mandates that employers must compensate employee for this non productive time at a rate of no less than applicable minimum wage.