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Frequently Asked Questions

AB 1513
Piece-Rate Compensation – New Labor Code §226.2

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When does the new law go into effect? What does AB 1513 do? What is piece-rate compensation? Does the new law apply to employees who work on a commission basis? What are the new compensation requirements for rest and recovery periods for piece-rate employees? How does an employer determine the average hourly rate to be paid for rest and recovery periods? If an employer pays a base hourly rate for all hours worked (for example, minimum wage), but also pays additional piece-rate compensation, is it sufficient for the employer to just pay minimum wage for the employee’s rest breaks? What types of compensation must be included in determining the average hourly rate to be paid for rest and recovery periods? What are “rest and recovery periods” as referred to in the new statute? Does new Labor Code section 226.2 mean that employers will need to track the number of minutes that employees actually take for their rest and recovery periods? Why are there different rules for employers who pay on a semi-monthly basis? What is “other nonproductive time?” What are the new compensation requirements for other nonproductive time? Does an employer need to track the amount of other nonproductive time worked by an employee who is compensated on a piece-rate basis? Are there any new wage statement requirements under this law? Does the new statute have any effect on time periods prior to January 1, 2016? What is the affirmative defense that is created by the statute for time periods prior to January 1, 2016? What does an employer need to do in order to have the affirmative defense created by the statute? If an employer elects to make the payments and meet the other requirements in order to have the affirmative defense, does the employer have to make payments to former employees? What is the notice that must be provided to the Department of Industrial Relations? What type of records does the employer have to provide concerning the payments that are made to employees for the purpose of obtaining the affirmative defense? Are all employers required to make the payments described in the affirmative defense portions of the statute (subdivision (b))? What happens if an employer elects not to make the payments described in subdivision (b) of the statute? Are certain types of claims and cases excluded from the affirmative defense provisions in subdivision (b) of the statute? Does this new statute change overtime compensation requirements?

December 2015