Manufacturing makes up a signficant 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.

California Labor Laws - Breaks Must be Provided for Piece-Rate Based Employees

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

1. Meal and Rest Breaks

Effective January 1, 2016, this law adds to the existing state Labor Code. The new Section 226.2 will make it even more difficult for California employers to pay employees on a piece-rate basis for any part of their work.

• It requires employers to pay piece-rate employees for rest and recovery periods, and all periods of “other nonproductive time” separately from, and in addition to, their piece-rate pay.
• It makes wage statement compliance for piece-rate employers even more complex.
• As it does not contain a collective bargaining exemption, it also applies to employers of unionized employees.

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.

Navigating 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: Payroll Outsourcing Guide click the button below and let us help you make an informed decision. Or you can call Accuchex Payroll Management Services at 877-422-2824.