BILL ANALYSIS                                                                                                                                                                                                    Ó


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                                 UNFINISHED BUSINESS

          Bill No:  SB 435
          Author:   Padilla (D)
          Amended:  8/22/13
          Vote:     21

          AYES:  Lieu, Leno, Padilla, Yee
          NOES:  Wyland

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           SENATE FLOOR  :  25-11, 5/2/13
          AYES:  Beall, Block, Calderon, Corbett, Correa, De León,  
            DeSaulnier, Evans, Galgiani, Hancock, Hernandez, Hill, Hueso,  
            Jackson, Lara, Leno, Lieu, Liu, Monning, Padilla, Pavley,  
            Price, Steinberg, Wright, Yee
          NOES:  Anderson, Berryhill, Emmerson, Fuller, Gaines, Huff,  
            Knight, Nielsen, Roth, Walters, Wyland
          NO VOTE RECORDED:  Cannella, Wolk, Vacancy, Vacancy

           ASSEMBLY FLOOR  :  54-23, 9/4/13 - See last page for vote

           SUBJECT  :    Compensation:  piece-rate workers:  rest and  
          recovery periods

           SOURCE  :     California Rural Legal Assistance Foundation
                      Teamsters Public Affairs Council

           DIGEST  :    This bill enacts provisions of law related to  
          recovery periods, as specified.


                                                                     SB 435

           Assembly Amendments  eliminate all the provisions related to  
          piece-rate and limit this bill to the provisions related to  
          recovery periods.
           ANALYSIS  :    

          Existing law establishes, within the Department of Industrial  
          Relations (DIR), the following entities:  

          1.Industrial Welfare Commission (IWC):  to regulate employee  
            wages, hours and working conditions.  

          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 (LAB) 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  

           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 10 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  

           2.Rest periods  .  IWC wage orders require that employers  



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            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 four 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  
          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.  

          This bill enacts provisions of law related to recovery periods,  
          as specified.  Specifically, this bill: 

          1. Provides that, in addition to meal and rest periods, an  
             employer shall not require any employee to work during any  
             "recovery period" mandated by any applicable statute,  
             regulation, standard or order of OSHSB or Cal/OSHA. 

          2. Defines a "recovery period" as a cool-down period afforded an  
             employee to prevent heat illness. 

          3. Provides that an existing provision of law that requires an  
             employer to pay an employee one additional hour of pay at the  
             employee's regular rate of compensation for each work day  
             that a meal or rest period is not provided also applies to  
             work days that a "recovery period" is not provided. 

          4. Provides that these provisions do not apply to an employee  
             who is exempt from meal or rest or recovery period  
             requirements pursuant to other state laws, as specified.

           Rest period requirements in statute, standards and iwc wage  
          orders  .  Each of the 17 IWC wage orders includes a section on  



                                                                     SB 435

          rest period requirements - authorizing non-exempt employees to  
          take a rest period at a rate of 10 minutes per four 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 LAB Section 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 five minutes at a time when they feel  
          the need to do so to protect themselves from overheating.

           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 have established 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.  The bill was vetoed by Governor  

          AB 755 (De La Torre, 2005), almost identical to SB 1538, 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.  The bill vetoed by Governor  

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  9/4/13)



                                                                     SB 435

          California Rural Legal Assistance Foundation (co-source) 
          Teamsters Public Affairs Council (co-source)
          California Conference Board of the Amalgamated Transit Union
          California Conference of Machinists
          California Teamsters Public Affairs Council 
          Engineers and Scientists of California, International Federation  
            of Professional and Technical Engineers Local 20
          International Longshore and Warehouse Union 
          National Lawyers Guild Labor and Employment Committee 
          Professional and Technical Engineers, International Federation  
            of Professional and Technical Engineers Local 21
          United Farm Workers 
          United Food and Commercial Workers Western States Council
          Utility Workers Union of America, Local 132

           OPPOSITION  :    (Verified  9/4/13)

          Air Conditioning Trade Association
          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 

           ARGUMENTS IN SUPPORT  :    According to proponents, 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 co-sponsor of this bill, California Rural Legal  
          Assistance Foundation (CRLAF), a 2004 CRLAF 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  



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          were paid their average piece-rate earnings during that time.   
          CRLAF argues 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  :    The 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 the opponents, for over 10 years,  
          California 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, the opponents are concerned that the  
          penalty provision of LAB 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 LAB  
          Section 512.

          Additionally, the 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.  The 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 eight 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 will potentially  
          transform such time spent sleeping or the mandated 8 hours of  
          off-duty time as compensable, as a "recovery period."



                                                                     SB 435

           ASSEMBLY FLOOR  :  54-23, 9/4/13
          AYES:  Alejo, Ammiano, Atkins, Bloom, Bocanegra, Bonilla, Bonta,  
            Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,  
            Chesbro, Cooley, Daly, Dickinson, Eggman, Fong, Fox, Frazier,  
            Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Hall,  
            Roger Hernández, Holden, Jones-Sawyer, Levine, Lowenthal,  
            Medina, Mitchell, Mullin, Muratsuchi, Nazarian, Pan, Perea, V.  
            Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,  
            Stone, Ting, Weber, Wieckowski, Williams, Yamada, John A.  
          NOES:  Achadjian, Allen, Bigelow, Chávez, Conway, Dahle,  
            Donnelly, Beth Gaines, Grove, Hagman, Harkey, Jones, Linder,  
            Logue, Maienschein, Mansoor, Morrell, Nestande, Olsen,  
            Patterson, Wagner, Waldron, Wilk
          NO VOTE RECORDED:  Melendez, Vacancy, Vacancy

          PQ:ek  9/5/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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