ALERT: Important news for farmers and others that pay, or previously paid, piece-rate – Notice to DIR is now required by July 28, 2016

Q:     What is going on with the lawsuit regarding piece-rate pay?

A:     We have previously discussed the new piece-rate legislation (AB 1513) in an earlier blog. No doubt, many employers (particularly those that have traditionally paid piece rate such as agricultural employers) view this legislation as a piece of what is found on many livestock farms across the Valley.  In short, the AB 1513 legislation resolved a dispute as to whether an employer was required to specifically pay for rest breaks where the employees were being paid piece-rate.  Prior to the legislation, there was a theory that an employer could pay an employee entirely by “piece-rate” so long as at the end of the day (or pay period) the employee made more than the minimum wage once the employer divided the compensation by the number of hours worked.  AB 1513 put that theory to rest and determined that employers must specifically pay for rest breaks and other non-productive time (such as heat breaks) even if the ultimate pay far exceeded minimum wage.

Because the previous “piece-rate” compensation was a fairly accepted and common pay practice, AB 1513 attempted to provide a mechanism for employers that did not specifically pay for rest breaks to avoid uncertainty and extensive liability.  Accordingly, AB 1513 stated that employers could file with the Department of Industrial Relations (“DIR”) and enter an agreement to provide back payments.  If the employer provided notice and made the specified payments, they would then have an affirmative defense against any employee that subsequently filed a claim for a failure to properly pay for non-productive time.  The original date for employers to provide notice to the DIR indicating that the employer was going to make the back payments was July 1, 2016.  The Nisei Farmer league filed a case in Fresno County Superior Court challenging the implementation of the law.  As a result there was a temporary restraining order staying the enforcement of the new law, and thus, staying the requirement to provide notice to the DIR.  On July 25, 2016, the court denied the preliminary injunction further staying enforcement of the new law. The date for employers to provide notice to the DIR is now July 28, 2016.

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


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