One point in the AB 1513 (Piece-rate Compensation) Regulations* has been overlooked by many employers. When any piece-rate compensation is made in a workweek, all rest & recovery time, including those taken on days when paid at an hourly rate, must be paid at the Regular Rate of Pay.
The Frequently Asked Section of California’s DIR website (https://www.dir.ca.gov/pieceratebackpayelection/AB_1513_FAQs.htm) includes multiple pay scenarios and how rest & recovery should be calculated. Following is one of the examples from their site:
For a workweek with both piece-rate work and hourly work:
- An employee works a 5-day, 40-hour workweek.
- On two 8-hour days of this workweek (for a total of 16 hours), the employee works at an hourly rate of $10/hour, and does no piece-rate work.
- On the other three days of the week (for a total of 24 hours), the employee does piece-rate work only and earns a total of $300 in piece-rate compensation.
- On each day of the workweek, the employee has two 10-minute rest periods authorized and permitted, for a total of 100 minutes (1.67 hours) of rest periods for the workweek.
- On the two hourly-work days, these rest periods are compensated at the $10 hourly wage.
The average hourly rate to be paid for the rest periods for this employee is calculated as follows:
$453.30 (total compensation for the workweek not including compensation for rest and recovery periods, which is the $300 in piece-rate compensation, plus the $160 for hourly work, less $6.70, which is the compensation for the 40 minutes of rest and recovery periods on the two hourly-rate days)
÷ 38.33 hours (which is 40 hours less the 1.67 hours of rest period time)
[NOTE: For the days on which the employee worked at an hourly rate, $10/hour of this time is already been paid as part of the hourly rate. For those two days, the employee is owed only an additional $1.83/hour for the rest periods. For the days on which the employee did piece-rate work, the rate to be paid for the rest periods is $11.83.]
Total compensation for the workweek
$160 (for the hourly rate work on two days)
+ $300 (the piece-rate compensation)
+ [$1.83 x .67 hours = $1.23] (the additional amount owed for the rest periods on the hourly rate days to bring them to the average hourly rate for the workweek)
+ $11.83 x 1.0 hour (for the rest periods on the piece-rate days)
In order to have Datatech software calculate and pay the rest & recovery on hourly days accurately, you’ll need to make two entries. One with the regular hours, minus the rest & recovery time. The rest & recovery time would be entered separately, utilizing the Wage and/or Job Code necessary for the Rest & Recovery report to calculate and update the pay rates.
For example, in a ten hour day with two breaks, you would have an entry with 9.667 hours at the employees’ hourly rate. A second entry with .334 hours of rest & recovery would also be entered. The Rest & Recovery report will then update the pay rate on the rest & recovery entries with the employees’ regular rate of pay, along with the other breaks taken in the workweek.
*California Regulation. This may not apply to all states.