New Changes to Piece Rate Pay

By July 27, 2016Business, News

AB 1513: Piece Rate Legislation. The look-back period

As you may already know, Governor Jerry Brown approved AB 1513: Piece Rate Legislation on October 10, 2015. The law took effect earlier this year on January 1, 2016.

That being said, I wanted to touch on the specific part of the text that is putting some pressure on California Employers. California Employers that employed any piece-rate workers from July 1, 2012 through December 31, 2015 have the opportunity to “look back” to make sure that any payments made are in compliance with this new law.

First, here is a basic summary of the law itself.

What does the law say?

The bill itself is over 4,000 words and 9 pages long, so I’ll save you some time and give you the short version. AB 1513 is shaking up piece-rate employment. As of January 1, 2016, employees must be compensated for rest and recovery periods, as well as other nonproductive time separate from any piece-rate compensation. In short, these workers must be granted breaks for which they will be paid, similar to hourly employees.

Pay for these rest periods shall be calculated as the higher of:

  1. a) applicable minimum wage
  2. b) An average hourly rate that is determined by dividing the total compensation for the workweek, not including compensation for rest periods and overtime, by the total hours worked during that workweek, not including rest and recovery periods.

The “Look-back” period

As mentioned above, California Employers that made payments to piece-rate workers from July 1, 2012 through December 31, 2015 can “look back” to make sure that those payments made are in compliance with this new law.

It is not required that employers take advantage of this opportunity to “look back”, which ends December 15, 2016; Rather, it is a chance to gain an affirmative defense to any claim for recovery of wages, damages, etc. and even civil and statutory penalties based on the employer’s failure to pay the employee for these rest periods.

In other words, if you go back and pay these workers for breaks that they missed during July 1, 2012 through December 31, 2015, you have earned yourself a solid defense against any issues that could arise out of these missed payments.

Another Important point!

Employers must notify the Department of Industrial Relations (DIR) of their intent to make the back payments. The deadline, originally set as July 1, 2016, is currently under review. That being said the DIR is accepting notifications of intent through July 28, 2016.

Keep in mind that there are small nuances, exceptions and exclusions that are included in the text of this law that are not mentioned above. I would encourage you to consult with a lawyer before taking any action.

Please let me know your thoughts!


Jessica Sanchez

Partner – The Corporate Advocate