The California legislature ushered in a number of new rules and regulations in 2015, as they have in every previous legislative session. Of the 930 laws submitted to the Governor, over 800 were signed by him. Among the California labor laws, breaks for rest and mealtime rules were included.
Although rules around employee breaks may be seemingly innocuous, the potential for lack of compliance and resulting fines and possible litigation is increasing real.
California Labor Laws - Breaks for Piece-Rate Workers
Existing California labor law concerning breaks for rest and meals has been established since 2012.
In 2012, the California Supreme Court decided an important meal and rest break case, Brinker Restaurant Corp. v. Superior Court.
The question of whether employers must ensure breaks are taken or must simply provide breaks has been a source of significant litigation in both federal and state courts.
The California Supreme Court ultimately ruled in Brinker's favor on the most critical part of the decision – holding that employers do not have to ensure employees take their meal breaks. Once the meal period is provided, there is no duty to police meal breaks to ensure no work is being done.
While the ruling was largely to the benefit of California employers, there are still possible issues for employers who are not diligent with compliance. Employers with vague policies may expose themselves to increased liability, and the court's decision makes it clear that meal and rest break issues are still subject to class action lawsuits.
In the latest lawmaking session, California passed AB1513 which focuses specifically on employees who are paid for piece work and on a piece-rate basis.
California Labor Law AB 1513: Workers’ Compensation and Piece-Rate Compensation
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 not only requires separate pay for rest and recovery periods, but mandates a method to compute that rate. In other words, employers will have to pay a rate calculated on a workweek-by-workweek basis, by using a specific formula that will present a challenge for many payroll systems. Specifically, it 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.
Other nonproductive time. Employers must pay piece-rate employees for “other non-productive” time (time when an employee is under the employer’s control, but is not engaged in activity directly related to the piece-rate activity) at a rate that is no less than the minimum wage. If an employer pays employees a base hourly rate for all hours worked in addition to piece-rate wages, then the employer need not pay amounts in addition to this hourly rate for the “other non-productive time.”
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.
The employer satisfies its legal obligation when it:
- Relieves its employees of all duty.
- Relinquishes control over their activities.
- Permits them a reasonable opportunity to take an uninterrupted, 30-minute break.
- Does not impede or discourage them from doing so.
A meal break can be unpaid only if all of the above conditions are met.
Note: When a work period of not more than six hours will complete the day's work, the meal period may be waived by mutual consent of the employer and the employee.
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.
Note: An employee can waive the second meal period only if all of the following conditions are met:
- The total hours worked on that workday are not more than 12.
- Employer and the employee mutually consent.
- The first meal break of the workday was not waived.
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.
As a general rule, and when practicable, the rest period must be in the middle of the four-hour work period. This is a general rule, however, and there is no absolute obligation to allow a rest period before a meal period.
There are exceptions.
According to the California Supreme Court in Brinker, "[s]horter or longer shifts and other factors that render such scheduling impracticable may alter this general rule." Employers are given some latitude as they may "deviate from that preferred course where practical considerations render it infeasible."
Note: Employers should be cautious about departing from the general rule to provide rest breaks in the middle of each work period and should consult with counsel if practical considerations unique to their industry appear to warrant a departure from the general rule.
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.
Staying on Top of California Labor Laws and Compliance
It is critical to keep your company safe and your management team informed and in compliance.If you have questions regarding this, or other HR issues and practices, let us help you in managing your HR needs, payroll processes, and staying on top of compliance demands. Get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.