BILL ANALYSIS Ó
AB 1513
Page 1
(Without Reference to File)
CONCURRENCE IN SENATE AMENDMENTS
AB
1513 (Williams)
As Amended September 9, 2015
Majority vote
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|ASSEMBLY: | 79-0 | (April 16, |SENATE: | | (September 11, |
| | |2015) | | |2015) |
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(vote not available)
Original Committee Reference: INS.
SUMMARY: 1) Deletes three obsolete study requirements for the
worker' compensation system; 2) clarifies and codifies the pay
requirements for piece rate workers for nonproductive time and
rest and recovery period time; and 3) establishes a process
through which employers, during a prescribed time period, can
make back wage payments for rest and recovery periods and
nonproductive time in exchange for relief from statutory
penalties and other damages.
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The Senate amendments add provisions to this bill that do the
following:
1)Change the author to Assembly Member Williams.
2)Provide that for employees compensated on a piece rate basis
during a pay period, the following shall apply for that pay
period:
a) Employees shall be compensated for rest and recovery
periods and other nonproductive time separate from any
piece rate compensation.
b) The itemized wage statement required under existing law
shall provide specified information.
c) Employees shall be compensated for rest and recovery
periods at regularly hourly rate of pay that is no less
than the higher of:
i) An average hourly rate determined by dividing the
total compensation for the workweek, exclusive of
compensation for rest and recovery periods and any
premium compensation for overtime, by the total hours
worked during the workweek, exclusive of rest and
recovery periods.
ii) The applicable minimum wage (as defined).
d) Employees shall be compensated for other nonproductive
time at an hourly rate that is no less than the applicable
minimum wage.
e) The amount of other nonproductive time may be determined
either through actual records or the employer's reasonable
estimates, whether for a group of employees or for a
particular employee, of other nonproductive time worked
during the pay period.
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f) An employer who is found to have made a good faith error
in determining the total or estimated amount of other
nonproductive time worked during the pay period shall
remain liable for the payment of compensation for all hours
worked in other nonproductive time, but shall not be liable
for specified civil penalties or liquidated damages based
solely on that error, provided that specified requirements
are met.
3)Provide that specified employers will shall have until April
30, 2016, to program their payroll systems to perform and
record the calculations required to comply with the
requirements for compensation for rest and recovery periods,
and itemized statements, so long as the employer pays piece
rate employees for all rest and recovery periods at or above
the applicable minimum wage from January 1, 2016, to April 30,
2016, and pays the difference between the amounts paid and the
average rate that would be owed, plus interest, by no later
than April 30, 2016. This provision shall only apply to an
employer that meets all of the following:
a) The employer was acquired by another legal entity on or
after July 1, 2015, and before October 1, 2015.
b) The employer employed at least 4,700 employees in this
state at the time of the acquisition.
c) The employer employed at least 17,700 employees
nationwide at the time of the acquisition.
d) The employer was a publicly traded company on a national
securities exchange at the time of the acquisition.
4)Provide the employer shall have an affirmative defense to any
claim or cause of action for recovery of wages, damages,
liquidated damages, statutory penalties, or civil penalties,
based solely on the employer's failure to timely pay the
employee the compensation due for rest and recovery periods
and other nonproductive time for time periods prior to and
including December 31, 2015, if, by December 15, 2016, an
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employer complies with all of the following:
a) The employer makes payments to each of its employees for
previously uncompensated or undercompensated rest and
recovery periods and other nonproductive time from July 1,
2012, to December 31, 2015, using either of the following
formulas:
i) The employer determines and pays the actual sums due
together with accrued interest.
ii) The employer pays each employee an amount equal to
4% of that employee's gross earnings in pay periods in
which any work was performed on a piece rate basis from
July 1, 2012, to December 31, 2015, as specified.
b) Payment shall not be required for any part of the time
period for which either of the following apply:
i) An employee has, prior to August 1, 2015, entered
into a valid release of claims not otherwise banned by
the Labor Code or any other applicable law for
compensation for rest and recovery periods and other
nonproductive time.
ii) A release of claims covered by this bill executed in
connection with a settlement agreement filed with a court
prior to October 1, 2015, and later approved by the
court.
c) By no later than July 1, 2016, the employer provides
written notice to the Department of Industrial Relations of
the employer's election to make payments to its current and
former employees in accordance with the requirements
outlined above.
d) The employer calculates and begins making payments to
employees as soon as reasonably feasible after it provides
the notice and completes the payments by no later than
December 15, 2016.
e) The employer provides each employee receiving a payment
with an accompanying accurate statement that contains
specified information.
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5)Provide that an employer who makes a reasonable and good faith
error to make the payments described above and to provide the
accurate statement, shall not lose the affirmative defense if
the employer, within 30 days of discovery or notice of the
error, makes the payment plus interest and provides the
accurate statement. The employer shall have the burden of
proving that a failure to pay an employee was solely the
result of good faith error.
6)Provide specified tolling provisions related to the statute of
limitations.
7)Provide that any notice to the Labor and Workforce Development
Agency (LWDA) on or before December 31, 2015, pursuant to the
Private Attorneys General Act of 2004 (PAGA) alleging
violations based upon failure to properly compensate employees
for rest and recovery periods, is void as to those alleged
violations. Beginning January 1, 2016, an aggrieved employee
or representative shall give such written notice by certified
mail to both the LWDA and the employer of any violation based
on failure to compensate employees fully for rest and recovery
periods and other nonproductive time.
8)Provide that the affirmative defense and related provisions
shall not apply to any of the following:
a) Damages and penalties previously awarded in an order or
judgment that was filed and not subject to further appeal
as of January 1, 2016.
b) Claims based on the failure to provide paid rest or
recovery periods or pay for other nonproductive time for
which all of the following are true:
i) The claim was asserted in a court pleading filed
prior to March 1, 2014, or was asserted in an amendment
to a claim that relates back to a court pleading filed
prior to March 1, 2014, and the amendment or permission
for amendment was filed prior to July 1, 2015.
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ii) The claim was asserted against a defendant named
with specificity and joined as a defendant, as specified.
c) Claims that employees were not advised of their right to
take rest or recovery periods, that rest and recovery
periods were not made available, or that employees were
discouraged or otherwise prevented from taking such breaks.
d) Claims for unpaid wages, damages, and penalties that
accrue after January 1, 2016.
e) Claims for paid rest or recovery periods or pay for
other nonproductive time that were made in any case filed
prior to April 1, 2015, when the case contained by that
date an allegation that the employer has intentionally
stolen, diminished, or otherwise deprived employees of
wages through the use of fictitious worker names or names
of workers that were not actually working.
f) An employer that is a new motor vehicle dealer.
9)Provide that nothing in this bill shall limit or bar any
action or proceeding by the Labor Commissioner or any private
party for any failure to provide a rest and recovery period in
accordance with any provision of law, other than actions or
proceedings based solely on the employer's failure to timely
pay the compensation due for rest and recovery periods.
10)Provide that nothing in this bill precludes a judge from
awarding statutory, contractual or common fund attorney's fees
or costs in connection with an action filed before October 1,
2015.
11)Contain a January 1, 2021, sunset date on the affirmative
defense and related provisions of the bill.
FISCAL EFFECT: Unknown
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COMMENTS: As passed by the Assembly, this bill deleted three
obsolete study requirements for the workers' compensation
system. However, Senate amendments add new language related to
compensation requirements for rest or recovery periods and other
nonproductive time for employees paid on a piece rate basis.
Existing law prohibits an employer from requiring employees to
work during a meal or rest or recovery period mandated pursuant
to an applicable statute, regulation, standard or order of the
Industrial Welfare Commission (IWC), the Occupational Safety and
Health Standards Board, or the Division of Occupational Safety
and Health. Failure to provide an employee with a meal or rest
or recovery period entitles the employee to one additional hour
of pay at his or her regular rate of compensation for each
workday that the meal, rest or recovery period is not provided.
Existing IWC Wage Orders generally state that "authorized rest
periods shall be counted as hours worked for which there shall
be no deduction from wages." In addition, recently enacted
legislation codified and clarified the requirement that a
legally mandated rest or recovery period is counted as hours
worked and therefore, shall not result in any deductions from an
employee's wages. (SB 1360 (Padilla), Chapter 72, Statutes of
2014).
Therefore, there is generally no dispute that rest periods are
hours worked for which employees must be paid. However, recent
court decisions have addressed disputes about the exact nature
of such compensation for employees paid on a piece rate basis,
in particular with respect to the calculation of compensation
for such rest periods and other nonproductive work time.
In March 2013, the California Court of Appeal held that
California's minimum wage law requires employers who compensate
employees on a piece rate basis to also pay those employees a
separate hourly wage for all other time worked, including work
performed before, after and between piece rate tasks
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("non-productive time"). Gonzalez v. Downtown LA Motors LP, 215
Cal. App. 4th 36 (2013). In that case, the court held that
automobile service technicians who were paid on a piece rate
basis must also be paid at least the minimum hourly wage for the
time they were required to wait between their piece-rate repair
work. The court noted that California law requires that
employees be paid "not less than the applicable minimum wage for
all hours worked in the payroll period, whether the remuneration
is measured by time, piece, commission, or otherwise."
The Gonzalez case did not specifically involve the situation of
rest periods. However, that issue was addressed in a subsequent
California Court of Appeals decision in Bluford v. Safeway, 216
Cal. App. 4th 846 (2013). In that case, truck drivers were
compensated primarily on the basis of miles driven and the
performance of specific tasks, a common piece rate system of
compensation. However, the plaintiffs alleged that this
compensation system failed to provide them paid rest breaks as
required by law because they were not paid a separate hourly
wage for such breaks. The defendant argued that the piece rate
compensation system already included compensation for rest
breaks. However, the court held that piece rate compensation
could not be "averaged" over non-piece rate (or rest break)
time, and that such rest periods could not therefore be
considered paid as required by California law.
Therefore, taken together, these recent court cases clarified
that piece-rate workers must be separately compensated for
non-productive time and rest and recovery periods.
Following these recent decisions, many employers have expressed
concern about liability since they had not previously
compensated employees paid on a piece rate system in such a
manner. They and others have expressed concerns that these
decisions may generate significant litigation and administrative
workload for employers, the courts, and the Labor Commissioner,
in actions to recover back wages and penalties. This litigation
will be costly and there is significant uncertainty whether
workers will recover back pay, and when that may occur.
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Therefore, this bill represents compromise in an attempt to
address many of these concerns. The legislation provides a
means to resolve these issues in a way that is intended to: 1)
reach more piece-rate workers and provide larger and more timely
back pay recoveries than could be expected through litigation;
2) relieve employers of related liability for statutory
penalties and damages for past violations; and 3) clarify
compensation requirements going forward in a way that protects
the right of piece-rate workers to be fully compensated for rest
and recovery periods and other nonproductive time.
Supporters argue that this bill addresses a historically vexing
challenge of calculating appropriate piece rate compensation,
yet balances the needs of workers and employers. Specifically,
supporters note that this bill provides clear guidance for
employers on appropriate wages during rest periods, recovery
periods, and nonproductive time, and that these wage rates would
not create disincentives for workers who want to take their
breaks. Supporters also note that this bill provides an
affirmative defense for employers, but only if they
retroactively compensate employees for their rest periods,
recovery periods, and nonproductive time. Supporters argue that
this bill is a fair compromise for both employers and workers,
addressing a situation where there was a significant development
in case law.
Opponents argue that although this bill would allow employers to
come into compliance and avoid continued exposure for unpaid
wage claims, it contains troubling provisions that unfairly
exclude participation by some agricultural employers. Opponents
argue that these arbitrary provisions set forth a troubling
precedent that represents political targeting that sacrifices
some companies to continued legal exposure in exchange for legal
protections afforded to others. In particular, opponents argue
that these provisions are an attempt to single out two
agricultural employers for retribution, by leaving them exposed
to multi-million dollar damage claims and penalties, while
eliminating similar liability threats faced by dozens of other
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similarly-situated growers. Opponents state that, whatever the
intent behind these changes, the result in unfair and
unconstitutional.
Analysis Prepared by: Ben Ebbink / L. & E. /
(916) 319-2091 FN: 0002384