Not all California employees earn a wage or salary. Some employees, including carpet-layers, factory workers, and mechanics, earn a piece rate. Unfortunately, many pieceworkers have to work themselves into a lather just to make the equivalent of the minimum wage. Consequently, many pieceworkers can go days, weeks, or even longer without earning the equivalent of minimum wage. Luckily, Labor Code section 226.2 codifies a basic principle: no justice, no piece rate. The justice that an employer must serve includes: (1) compensation for all rest and recovery (R&R) periods and other nonproductive time and (2) special wage statements.
I. How Pieceworkers Get a Bigger Piece of the Pie
A. Rest and Recovery Periods
If an employer wants to base an employee’s compensation even partly on a piece rate, the employer must pay the employee for all R&R periods. Section 226.2 requires the employer to base rest and recovery compensation on the regular hourly rate of the greater of: (1) an “average hourly rate”; or (2) the highest federal, state, and local minimum wage applicable to the employment.1 The employer can determine the “average hourly rate” simply by dividing the employee’s total compensation for the workweek (excluding pay for R&R periods and overtime) by the total hours he worked during the workweek (excluding R&R periods).2
California law establishes two kinds of R&R periods: (1) basic rest periods and (2) cool-down rest periods. Every employee may take a basic 10-minute rest period for every four hours of work or major fraction thereof.3 But every outdoor agricultural employee must take a 10-minute cool-down rest period every two hours once temperatures hit 95.4 In many cases, his employer can make him take a cool-down rest period concurrently with another mandatory meal or rest period, but only during the first eight hours of work.5 Section 226.2 now requires that an employer compensate for both types of R&R periods.
B. Other Nonproductive Time
The employer must also compensate a pieceworker for “other nonproductive time” at an hourly rate that is no less than the applicable minimum wage.6 “Nonproductive time” means any non-R&R time that a pieceworker spends under his employer’s control that isn’t “directly related” to the “activity” that the employer is compensating on a piece-rate basis. That might mean an that employer would have to compensate a pieceworker’s bathroom break, as such a break wouldn’t even be indirectly related to the piecework, unless the piecework is to taste-test beans or something else that makes him run to the bathroom.
The employer can determine the amount of other nonproductive time either through records or his own reasonable estimates.7 If he makes a good-faith mistake in the process, he won’t be liable for “statutory civil penalties” or liquidated damages if: (1) he pays the pieceworker for the other nonproductive time and provides a wage statement that shows the pieceworker’s total hours of other nonproductive time, rate of pay, and gross wages during the pay period; and (2) the total pay for any day in the pay period is at least what the employer owes the pieceworker under the applicable minimum wage and for overtime.8
II. New Requirements for Pieceworker Wage Statements
Every employer must give an employee an itemized wage statement.9 Generally, the wage statement must show: (1) the employee’s gross earnings; (2) the total hours he worked; (3) the number of piece-rate units and the applicable piece rate; (4) all deductions; (5) his net earnings; (6) the inclusive dates of the pay period; (7) his name and last four digits of his social security number or employee identification number; (8) the employer’s legal name and address; and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours that the employee worked at each hourly rate.10
Section 226.2 now requires that the wage statement separately show: (1) a pieceworker’s total hours of R&R periods, his rate of compensation, and his gross wages for the R&R periods during the pay period; and (2) his total hours of other nonproductive time, his rate of compensation, and his gross wages for that time during the pay period.11 The wage statement doesn’t have to show his total hours of other nonproductive time if, in addition to any piece rate compensation he receives during the pay period, he receives the applicable minimum wage for all hours he has worked during the pay period.12