California recently made a significant change with its labor laws, specifically about piece-rate compensation. If you are an employer that pays your employees by a piece-rate system, then you should know about this recent change. Otherwise, you could be unknowingly underpaying your employees, which can easily lead to an expensive lawsuit for you.

On the other hand, if you are an employee, then knowing about this recent change entitles you to proper compensation set by California’s labor code.

What Is It?

In some industries, it’s common for employers to pay their employees by “piece-rate” system. If an employee is on a piece-rate system, he/she gets paid for every completed task or per the number of produced units.

Common Examples:

* Carpenters that are paid by the yard
* Technicians that are compensated based on the number of units installed
* Nurses that are paid based on the number of procedures done
* Factory workers that are paid on the basis of the number of widgets he/she can produce

When practiced correctly, the piece-rate system encourages increased productivity, which is good for the employer. Employees also get the benefit of having the opportunity to earn more compared to a fixed hourly rate system.

The New Piece-Rate Compensation

California’s new piece-rate compensation is also known as the AB 1513. It went to effect last January 1, 2016. Under this recent change, California piece-rate employees must be compensated for non-productive time on top of what they are getting from the piece-rate compensation.

The additional compensation is determined by dividing the worker’s total compensation for the workweek by the number of hours worked during the same workweek. Calculations can easily get confusing, and that’s why it’s best that you consult with a professional to avoid costly problems.

Are There Any Exceptions?

Some employees may be exempt from this new change. One good example is when the employee is being paid on a commission basis. Before a compensation can be considered as a “commission basis,” the pay must be on a percentage basis in relation to the sale price.

While the employers have control on the design of the piece-rate compensation, it is not possible for the employer to opt-out from paying compensation for non-productive time. The compensation for non-productive time is based on the average hourly rate. Also, piece-rate employees must be paid for overtime. The technical details of the new change can easily get confusing, and it’s best that you consult with the appropriate professional as soon as possible.

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In order to underpay their workers, some employers in certain industries in California pay their workers piece-rate compensation instead of an hourly basis. Moreover, until the recent changes in Californian law, the employees were not aware of the fact that they are paid their due wages. Brief information about piece-rate compensation law of California is provided here under to know whether your employer owes you some wages.

Who is a piece-rate employee?

An employee who is paid on the basis of his/her measurable completed work instead of the time spent at the workplace is a piece-rate employee. It can be tricky to determine a piece-rate employee as piece-rate compensation is applicable in many situations like:

Nurses paid on the number of performed procedures, auto mechanic on a rate based on the Chilton manual, technicians paid on the number of installed units, carpenters paid by footage of framing job or yards of carpet laid, and factory workers paid on the number of completed items are all good examples.

What is AB 1513?

On January 1st, 2016 a new section, AB 1513, has been effectively included in the piece-rate compensation law of California Labor Code. According to this section, it is necessary to submit wage and compensation statement by the piece-rate employees for their defense if their employer fails to pay compensation for nonproductive time or for the recovery or rest time which they deserve as per Californian law. The rate of compensation should be higher than the average hourly rate or minimum applicable wage rate.

Employees exempted from AB 1513

Under AB 1513, some employees are exempted to get additional compensation for non-productive time. These employees may include the workers working on a commission basis and paid on the basis of certain percentage of the sale.

Types of piece-rate compensations that come under AB 1513

Every claim under piece-rate compensation law is unique. You can file a claim against your employer to determine whether you are eligible for it or not. There are certain other eligibility conditions for the employees to file a claim under this law like:

• If your employers has classified you as commission based employee.
• If you are not compensated for valid non-productive time.
• If your employer neither allows you to take rest time even after working for more than 3.5 hours in a day nor pays for non-productive time
• If your employer does not compensate you for nonproductive time, excluding recovery and rest periods.
• If your employer retaliates against you for filing a claim for unpaid wages for nonproductive timeSo, according to AB 1513, the employees have legal right to contact an employment attorney if they are paid on piece-rate and not for non-productive time.

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