BILL ANALYSIS �
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THIRD READING
Bill No: SB 435
Author: Padilla (D)
Amended: 4/16/13
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 4-1, 4/10/13
AYES: Lieu, Leno, Padilla, Yee
NOES: Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Compensation: piece-rate workers: rest and
recovery periods
SOURCE : California Rural Legal Assistance Foundation
DIGEST : This bill extends existing rest period protections
available within the Industrial Welfare Commission (IWC) wage
orders to workers paid on a "piece-rate basis" as well as make
them applicable during an employee's recovery period, or to
employees exempt under law, as specified.
ANALYSIS :
Existing law establishes, within the Department of Industrial
Relations (DIR), the following entities:
1.IWC: to regulate employee wages, hours and working
conditions. (Labor Code Sections 70-74)
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2.Division of Occupational Safety and Health (Cal/OSHA): tasked
with the responsibility of protecting workers and the public
from safety hazards through its various programs.
3.Occupational Safety and Health Standards Board (OSHSB): to
adopt reasonable and enforceable standards at least as
effective as federal standards.
4.Division of Labor Standards Enforcement: to adjudicate wage
claims, investigate discrimination and public works
complaints, and enforce Labor Code and IWC wage orders.
Existing law, with certain exceptions, defines a day's work as
eight hours of labor. Any additional hours worked in excess of
eight hours in one day, or a 40-hour workweek, must be
compensated with the payment of overtime.
Regarding meal and rest periods, existing law requires the
following:
1.Meal Periods: An employer may not employ a worker for a
period of more than five hours per day without providing the
employee with a meal period of not less than 30 minutes,
except that if the total work period per day is no more than
six hours, the meal period may be waived by mutual consent of
both parties. A second 30 minute meal period is required if
an employee works more than ten hours per day, except if total
hours worked is no more than 12, the second meal period may be
waived by mutual consent only if the first meal period was not
waived.
2.Rest Periods: IWC wage orders require that employers
authorize and permit nonexempt employees to take a rest period
that must, insofar as practicable, be taken in the middle of
each work period. The rest period is based on the total hours
worked and must be at the minimum rate of a net 10 consecutive
minutes for each 4 hour work period, or major fraction
thereof. A rest period is not required for employees whose
total daily work time is less than 3.5 hours. According to
the IWC wage orders, authorized rest periods are counted as
time worked and therefore, must be paid by the employer.
Under existing law, no employer shall require any employee to
work during any meal or rest period mandated by an applicable
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order of the IWC. If an employer fails to provide an employee a
meal period or rest period in accordance with an applicable
order of the IWC, the employer shall pay the employee one
additional hour of pay at the employee's regular rate of
compensation for each work day that the meal or rest period is
not provided. (Labor Code Sec.226.7)
This bill extends existing rest period protections available
within the IWC wage orders to workers paid on a "piece-rate
basis" as well as make them applicable during an employee's
recovery period, as specified.
Specifically, this bill:
1.Defines "piece-rate basis" as a method of payment based on
units of production earned by an employee during a work day or
pay period, or any fraction thereof.
2.Adds to the existing IWC wage order requirements regarding
meal and rest periods, the following:
A. Prohibits an employer from requiring an employee to
work during any meal, rest or recovery period mandated
pursuant to any applicable statute, regulation, or
standard of the Occupational Safety and Health Standards
Board (OSHSB), or the Division of Occupational Safety and
Health (Cal/OSHA).
B. Extends the requirement that employers pay one
additional hour for failure to provide a meal, rest or
recovery period as required by applicable statutes,
regulations, or standards of the OSHSB or Cal/OSHA.
C. Provides that rest or recovery periods mandated
pursuant to any statute, regulation, standard, or order
of the IWC, the OSHSB, or Cal/OSHA, shall be counted as
hours worked for which there shall be no deduction from
wages. [IWC orders already require -this bill would
codify the requirement]
D. Specifies that employees working on a "piece-rate
basis" shall be compensated for rest periods by being
paid his/her average piece-rate wage during each pay
period, or portion of, in which the employee was paid on
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a piece-rate basis.
E. Authorizes a piece-rate worker, pursuant to a civil
action or a claim filed with the Division of Labor
Standards Enforcement, to recover his/her unpaid average
piece-rate wage for each rest or recovery period in which
a violation of these provisions occurred.
F. Provides that the provisions of this bill do not
apply to an employee whose wages, hours, and working
conditions are covered by a collective bargaining
agreement that expressly addresses rest or recovery
periods for employees paid on a piece-rate basis, or to
employees exempt under the law, as specified.
Comments
Rest Period Requirements in Statute, Standards and IWC Wage
Orders:
Each of the seventeen (17) IWC wage orders includes a section on
rest period requirements - authorizing non-exempt employees to
take a rest period at a rate of ten (10) minutes per 4 hours or
major fraction thereof. According to the IWC Wage Orders,
authorized rest period time shall be counted as hours worked for
which there shall be no deduction from wages.
In addition to the IWC wage orders and Labor Code Sec.226.7, the
Heat Illness Prevention regulations established by the OSHSB
have an additional requirement regarding a rest period
applicable to all outdoor places of employment. Since August
2005, employers in the State of California have been required by
regulation to protect outdoor employees from the hazard of heat
illness. This regulation was promulgated in response to
unusually hot summer temperatures over a wide area of the state
which led to a greatly elevated number of cases of serious heat
illness in the workplace, including a number of deaths. This
regulation, codified at Title 8 California Code Regulations
Section 3395, came about first by adoption of an emergency
temporary standard and was followed by adoption of a permanent
standard in 2006. Under these regulations, employees are
allowed and encouraged to take a cool-down rest in the shade for
a period of no less than 5 minutes at a time when they feel the
need to do so to protect themselves from overheating.
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Prior Legislation
SB 1538 (Alarcon, 2004) would have required employers to pay
employees for any rest period mandated by statute, regulation,
or order of the IWC and would establish the formula by which the
rate of pay would have been determined for the rest periods of
piece-rate workers in the agricultural and garment industries,
as specified. Vetoed by the Governor.
AB 755 (De La Torre, 2005), almost identical to SB 1538,
however, AB 755 did not enumerate the formula that would have
been used to determine the rate of pay of piece-rate workers,
but rather states that it be the "average piece-rate" wage.
Vetoed by the Governor.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/29/13)
California Rural Legal Assistance Foundation (source)
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Teamsters Public Affairs Council
Engineers & Scientists of California, IFPTE Local 20
International Longshore & Warehouse Union
National Lawyers Guild Labor & Employment Committee
Professional and Technical Engineers, IFPTE Local 21
United Farm Workers
United Food and Commercial Workers Western States Council
UNITE-HERE, AFL-CIO
Utility Workers Union of America, Local 132
OPPOSITION : (Verified 4/29/13)
Air Conditioning Trade Association
California Association of Winegrape Growers
California Framing Contractors Association
California Professional Association of Specialty Contractors
California Retailers Association
National Federation of Independent Business
Plumbing-Heating-Cooling Contractors Association of California
Western Electrical Contractors Association
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ARGUMENTS IN SUPPORT : According to proponents of the measure,
this bill will clarify how paid rest breaks and recovery periods
are to be compensated by employers when employees are paid on a
piece-rate basis. Proponents argue that piece-rate workers,
unlike their hourly or salaried counterparts, are often induced
to work through their rest or recovery periods because they
suffer a loss of income. They believe this bill is necessary to
increase incentives for piece-rate workers to actually take
their rest and heat stress recovery periods rather than
"willingly" working through them to avoid losing money.
According to the sponsor of the measure, a 2004 CA Rural Legal
Assistance Foundation survey of more than 1,000 piece-rate farm
workers laboring in the raisin harvest, found that more than 70%
of workers "voluntarily" worked through rest periods to avoid
losing money. Nearly two-thirds of them said they would be
"more likely" to take rest periods if they were paid their
average piece-rate earnings during that time. The sponsors
argue that it is significant that these results were obtained
from surveying workers in Central Valley raisin harvests where
triple digit temperatures have resulted in farm worker deaths
from heat stress. They argue that while not all piece-rate
workers potentially face a life or death decision when they are
not given their rest periods, compliance by employers with these
important state policies should not be so insidiously undermined
by the manner in which workers are paid.
ARGUMENTS IN OPPOSITION : Opponents argue that this bill will
threaten a new wave of destructive and costly litigation to
California employers by including exempt employees under the
one-hour penalty for failure of an employer to provide a meal or
rest period. According to opponents, for over ten years, CA
employers suffered as a result of class action litigation
regarding the meaning of the term "provide" with regard to meal
and rest periods for hourly, non-exempt employees. With this
bill, opponents are concerned that the penalty provision of
Labor Code Section 226.7 would be significantly expanded to
include exempt employees by making the penalty available to not
just those employers that fail to comply with the IWC wage
orders, but also to any employer who fails to comply with
statutory meal and rest period requirements in Labor Code
Section 512.
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Additionally, opponents contend that, as exempt employees,
employers do not track such employees' time, thereby making it
extremely difficult for employers to adequately and fairly
defend themselves in litigation. Opponents also argue that the
proposed definition of piece-rate is also extremely broad, as it
could include exempt employees who are paid, in part, a
production bonus based upon a specific unit of time, number of
items sold, or even certain amount of sales. Furthermore, they
argue that this bill could significantly increase costs for
employers who have employees with mandated periods of rest that
could be characterized as "recovery periods" subject to
compensation. For example, IWC Wage Order No. 5-2001 mandates
that an employee who works 24 consecutive hours must receive at
least 8 hours of off-duty time. It also states that an
employee's time spent sleeping is not considered hours worked.
Opponents are concerned, that this bill would potentially
transform such time spent sleeping or the mandated 8 hours of
off-duty time as compensable, as a "recovery period."
PQ:ej 4/29/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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