Employers are continually burdened with compliance issues and with California labor laws, breaks for rest periods and meals make compliance that much more challenging. 

Manufacturing makes up a significant percentage of California industry. As a result, there are large sectors employing people who are paid on a piece-rate basis for all or part of their work duties.

While most employers provide breaks for these individuals, these are usually not paid periods of time.  That has changed with the addition of Section 226.2 of the California State Labor Code.

Complying With California Labor Laws - Breaks for Piece-Rate Workers

There were a number of changes and additions to California labor law in 2015. Employer provision for meal and rest breaks was one of the more prominent changes.

AB 1513 added Labor Code section 226.2 and repealed sections 77.7, 127.6, and 138.65. The net result was to make it even more difficult for California employers to pay employees on a piece-rate basis. The changes went into effect on January 1, 2016 and requires employers to pay piece-rate employees for rest and recovery periods (and all other periods of “nonproductive” time) separately from (and in addition to) their piece-rate compensation.

Specifically, employers will need to pay the following rates for rest and recovery periods and “other nonproductive time”:

• Rest and recovery periods. Employers must pay a piece-rate employee for rest and recovery periods at an average hourly rate that is determined by dividing the employee’s total compensation for the workweek (not including compensation for rest and recovery periods and overtime premiums) by the total hours worked during the workweek (not including rest and recovery periods).
• Other nonproductive time. Employers must pay piece-rate employees for other nonproductive time at a rate that is no less than the minimum wage. If employers pay an hourly rate for all hours worked in addition to piece-rate wages, then those employers would not need to pay amounts in addition to that hourly rate for the other nonproductive time.

Employers must specify additional categories of information on a piece-rate employee’s itemized wage statement: (i) the total hours of compensable rest and recovery periods, (ii) the rate of compensation paid for those periods, and (iii) the gross wages paid for those periods during the pay period.

If employers do not pay a separate hourly rate for all hours worked (in addition to piece-rate wages), then the employer must also list the total hours of other non-productive time, the rate of compensation for that time, and the gross wages paid for that time during the pay period. 

A Closer Look at California Labor Laws - Breaks for Piece-Rate Workers

Here is a detailed breakdown of the requirements embodied in Section 226.2 of the Labor Code:

1. Meal and Rest Breaks

Section 226.2 requires that employers pay employees for rest and recovery periods and “other nonproductive time” as follows:

Rest and recovery periods.

Employers must pay piece-rate employees for rest and recovery periods at an hourly rate that is determined by dividing the employee’s total compensation for the workweek (excluding compensation for rest and recovery periods and overtime premiums) by the total hours worked during the workweek (not including rest and recovery periods). The bill allows certain employers some additional time to program their payroll systems to comply with the “average hourly rate” requirement, provided that they retroactively pay employees the required amount.

Until April 30, 2016, certain large, newly acquired, or publicly-traded employers can pay employees the applicable minimum wage for rest and recovery periods, provided that they begin paying employees based on the specified rate by April 30, 2016 and retroactively pay all affected employees the difference between minimum wage and the required average hourly rate (plus interest) by that date. All other employers must modify their payroll systems to comply with the new requirements by January 1, 2016.

Meal and Rest Break Obligations of Employers In California

Employees cannot work more than five hours without providing an unpaid, off-duty meal period of at least 30 minutes. The first meal period must be provided no later than the end of the employee's fifth hour of work.

Second 30-Minute Meal Break

If an employee works more than 10 hours employers must provide a second meal break of no fewer than 30 minutes. The second meal break must be provided no later than the end of an employee's 10th hour of work.

10-Minute Rest Break Obligations

Employers permit rest periods for all nonexempt employees whose total daily work time is at least 3.5 hours. These mandatory rest breaks must be offered at the rate of 10 minutes for every four hours worked, or "major fraction" thereof. Anything over two hours is considered by the courts to be a "major fraction" of four.

Rest periods must be treated as hours worked, and employers must pay rest periods as time worked. Because employees receive compensation for rest breaks, they can be required to remain on the premises during their rest breaks.

Find Help With California Labor Laws - Breaks and Other Employer Requirements

Many of these new regulations expand the scope of risk for employers, and require new workplace postings or changes to existing workplace policies. We recommend that all California employers consult with experienced employment counsel to ensure compliance.

Accurate and timely management and compliance practices are required for every business and every payroll professional. But there are options. Accuchex, a reputable payroll management services provider, can not only relieve you of the burden of your ongoing payroll process demands, but can potentially prove to be a more cost-effective solution, as well.

To get your Free Download California Labor Law: What You Need To Know, click the button below and let us help you make an informed decisions. Or you can call Accuchex Payroll Management Services at 877-422-2824.