Bill Text: CA AB1513 | 2015-2016 | Regular Session | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Employment: workers' compensation and piece-rate compensation.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2015-10-10 - Chaptered by Secretary of State - Chapter 754, Statutes of 2015. [AB1513 Detail]

Download: California-2015-AB1513-Enrolled.html

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BILL NUMBER: AB 1513	ENROLLED
	BILL TEXT

	PASSED THE SENATE  SEPTEMBER 11, 2015
	PASSED THE ASSEMBLY  SEPTEMBER 11, 2015
	AMENDED IN SENATE  SEPTEMBER 9, 2015
	AMENDED IN SENATE  AUGUST 27, 2015
	AMENDED IN ASSEMBLY  MARCH 26, 2015

INTRODUCED BY   Assembly Member Williams

                        MARCH 5, 2015

   An act to add and repeal Section 226.2 of, and to repeal Sections
77.7, 127.6, and 138.65 of, the Labor Code, relating to employment.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1513, Williams. Employment: workers' compensation and
piece-rate compensation.
   (1) Existing law establishes a workers' compensation system,
administered by the Administrative Director of the Division of
Workers' Compensation, to compensate an employee for injuries
sustained in the course of his or her employment.
   Existing law requires the Commission on Health and Safety and
Workers' Compensation to undertake a specified study examining the
causes of the number of insolvencies among workers' compensation
insurers to be conducted by an independent research organization, and
requires the commission and the Department of Industrial Relations,
no later than July 1, 2009, to publish the report of the study on its
Internet Web site and to inform the Legislature and the Governor of
the availability of the report.
    Existing law requires the administrative director, in
consultation with the commission and other entities, to conduct a
study of medical treatment provided to workers who have sustained
industrial injuries and illness, and to report and make
recommendations to the Legislature on or before July 1, 2004.
   Existing law requires the administrative director, after
consultation with the Insurance Commissioner, to contract with a
qualified organization to study the 2003 and 2004 legislative reforms
on insurance rates, and to submit the study to the Governor and
Legislature. Existing law requires the Governor and the Insurance
Commissioner to review that study and make recommendations, and
authorizes them to submit proposals to the Legislature.
   This bill would repeal these obsolete workers' compensation study
requirements.
   (2) Existing law prohibits an employer from requiring an employee
to work during any meal or rest or recovery period mandated by an
applicable statute or specified regulation, standard, or order,
establishes penalties for an employer's failure to provide a mandated
meal or rest or recovery period, and requires rest or recovery
periods to be counted as hours worked. Existing law establishes the
Division of Labor Standards Enforcement in the Department of
Industrial Relations for the enforcement of labor laws, including
laws related to wage claims. Existing law requires every employer,
semimonthly or at the time of each payment of wages, to furnish each
employee with an accurate itemized statement in writing showing
specified information. A knowing and intentional violation of this
provision by an employer is a misdemeanor, as specified.
   This bill would require the itemized statement provided to
employees compensated on a piece-rate basis to also separately state
the total hours of compensable rest and recovery periods, the rate of
compensation, and the gross wages paid for those periods during the
pay period, and the total hours of other nonproductive time, as
specified, the rate of compensation, and the gross wages paid for
that time during the pay period. The bill would require those
employees to be compensated for rest and recovery periods and other
nonproductive time at or above specified minimum hourly rates,
separately from any piece-rate compensation. The bill would define
"other nonproductive time" for purposes of these provisions to mean
time under the employer's control, exclusive of rest and recovery
periods, that is not directly related to the activity being
compensated on a piece-rate basis. Because a knowing and intentional
violation of these requirements would be a crime, the bill would
impose a state-mandated local program.
   The bill, until January 1, 2021, would provide that an 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 no later than December 15, 2016, the
employer complies with specified requirements, subject to specified
exceptions.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 77.7 of the Labor Code is repealed.
  SEC. 2.  Section 127.6 of the Labor Code is repealed.
  SEC. 3.  Section 138.65 of the Labor Code is repealed.
  SEC. 4.  Section 226.2 is added to the Labor Code, to read:
   226.2.  This section shall apply for employees who are compensated
on a piece-rate basis for any work performed during a pay period.
This section shall not be construed to limit or alter minimum wage or
overtime compensation requirements, or the obligation to compensate
employees for all hours worked under any other statute or local
ordinance. For the purposes of this section, "applicable minimum wage"
means the highest of the federal, state, or local minimum wage that
is applicable to the employment, and "other nonproductive time" means
time under the employer's control, exclusive of rest and recovery
periods, that is not directly related to the activity being
compensated on a piece-rate basis.
   (a) For employees compensated on a piece-rate basis during a pay
period, the following shall apply for that pay period:
   (1) Employees shall be compensated for rest and recovery periods
and other nonproductive time separate from any piece-rate
compensation.
   (2) The itemized statement required by subdivision (a) of Section
226 shall, in addition to the other items specified in that
subdivision, separately state the following, to which the provisions
of Section 226 shall also be applicable:
   (A) The total hours of compensable rest and recovery periods, the
rate of compensation, and the gross wages paid for those periods
during the pay period.
   (B) Except for employers paying compensation for other
nonproductive time in accordance with paragraph (7), the total hours
of other nonproductive time, as determined under paragraph (5), the
rate of compensation, and the gross wages paid for that time during
the pay period.
   (3) (A)  Employees shall be compensated for rest and recovery
periods at a regular hourly rate 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.
   (B) For employers who pay on a semimonthly basis, employees shall
be compensated at least at the applicable minimum wage rate for the
rest and recovery periods together with other wages for the payroll
period during which the rest and recovery periods occurred. Any
additional compensation required for those employees pursuant to
clause (i) of subparagraph (A) is payable no later than the payday
for the next regular payroll period.
   (C) (i) Employers who meet the requirements in clause (ii) shall
have until April 30, 2016, to program their payroll systems to
perform and record the calculation required by clause (i) of
subparagraph (A) and comply with the itemized statement requirements
in paragraph (2), 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, inclusive, and pays the
difference between the amounts paid and the amounts that would be
owed under clause (i) of subparagraph (A), together with interest
calculated in accordance with subdivision (c) of Section 98.1, by no
later than April 30, 2016.
   (ii) For an employer to meet the requirements of this
subparagraph, all of the following shall apply:
   (I) The employer was acquired by another legal entity on or after
July 1, 2015, and before October 1, 2015.
   (II) The employer employed at least 4,700 employees in this state
at the time of the acquisition.
   (III) The employer employed at least 17,700 employees nationwide
at the time of the acquisition.
   (IV) The employer was a publicly traded company on a national
securities exchange at the time of the acquisition.
   (4) Employees shall be compensated for other nonproductive time at
an hourly rate that is no less than the applicable minimum wage.
   (5) 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.
   (6) 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 statutory civil penalties, including, but not
limited to, penalties under Section 226.3, or liquidated damages
based solely on that error, provided that both of the following are
true:
   (A) The employer has provided the wage statement information
required by subparagraph (B) of paragraph (2) and paid the
compensation due for the amount of other nonproductive time
determined by the employer in accordance with the requirements of
paragraphs (4) and (5).
   (B) The total compensation paid for any day in the pay period is
no less than what is due under the applicable minimum wage and any
required overtime compensation.
   (7) An employer who, in addition to paying any piece-rate
compensation, pays an hourly rate of at least the applicable minimum
wage for all hours worked, shall be deemed in compliance with
paragraph (4).
   (b) Notwithstanding any other statute or regulation, the employer
and any other person shall have an affirmative defense to any claim
or cause of action for recovery of wages, damages, liquidated
damages, statutory penalties, or civil penalties, including
liquidated damages pursuant to Section 1194.2, statutory penalties
pursuant to Section 203, premium pay pursuant to Section 226.7, and
actual damages or liquidated damages pursuant to subdivision (e) of
Section 226, 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 no later than December 15, 2016, an
employer complies with all of the following:
   (1) The employer makes payments to each of its employees, except
as specified in paragraph (2), for previously uncompensated or
undercompensated rest and recovery periods and other nonproductive
time from July 1, 2012, to December 31, 2015, inclusive, using one of
the formulas specified in subparagraph (A) or (B):
   (A) The employer determines and pays the actual sums due together
with accrued interest calculated in accordance with subdivision (c)
of Section 98.1.
   (B) The employer pays each employee an amount equal to 4 percent
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, inclusive, less amounts already paid to that employee,
separate from piece-rate compensation, for rest and recovery periods
and other nonproductive time during the same time, provided that the
amount by which the payment to each employee may be reduced for
amounts already paid for other nonproductive time shall not exceed 1
percent of the employee's gross earnings during the same time.
   (2) Payment shall not be required for any part of the time period
specified in paragraph (1) for which either of the following apply:
   (A) An employee has, prior to August 1, 2015, entered into a valid
release of claims not otherwise banned by this code or any other
applicable law for compensation for rest and recovery periods and
other nonproductive time.
   (B) A release of claims covered by this subdivision executed in
connection with a settlement agreement filed with a court prior to
October 1, 2015, and later approved by the court.
   (3) By no later than July 1, 2016, the employer provides written
notice to the department of the employer's election to make payments
to its current and former employees in accordance with the
requirements of this subdivision and subdivision (c).
   (A) The notice must include the legal name and address of the
employer and must be mailed or delivered to the Director of
Industrial Relations, Attn: Piece-Rate Section, 226.2 Election
Notice, 1515 Clay Street, 17th Floor, Oakland, CA 94612. The director
may provide for an email address to receive notices electronically
in lieu of postal mail.
   (B) The department shall post on its Internet Web site either a
list of the employers who have provided the required notice or copies
of the actual notices. The list or notices shall remain posted until
March 31, 2017.
   (4) The employer calculates and begins making payments to
employees as soon as reasonably feasible after it provides the notice
referred to in paragraph (3) and completes the payments by no later
than December 15, 2016, to each employee to whom the wages are due,
or to the Labor Commissioner pursuant to Section 96.7 for any
employee whom the employer cannot locate.
   (5) The employer provides each employee receiving a payment with
an accompanying accurate statement that contains all of the following
information:
   (A) A statement that the payment has been made pursuant to this
section.
   (B) A statement as to whether the payment was determined based on
the formula in subparagraph (A) of paragraph (1), or on the formula
in subparagraph (B) of paragraph (1).
   (C) If the payment is based on the formula in subparagraph (A) of
paragraph (1), a statement, spreadsheet, listing, or similar document
that states, for each pay period for which compensation was included
in the payment, the total hours of rest and recovery periods and
other nonproductive time of the employee, the rates of compensation
for that time, and the gross wages paid for that time.
   (D) If the payment is based on the formula in subparagraph (B) of
paragraph (1), a statement, spreadsheet, listing, or similar document
that shows, for each pay period during which the employee had
earnings during the period from July 1, 2012, through December 31,
2015, inclusive, the gross wages of the employee and any amounts
already paid to the employee, separate from piece-rate compensation,
for rest and recovery periods and other nonproductive time.
   (E) The calculations that were made to determine the total payment
made.
   (c) An employer who makes a reasonable and good faith effort to
make the payments described in paragraph (1) of subdivision (b), and
to provide the accurate statement described in paragraph (5) of
subdivision (b), to all employees, but who solely through good faith
error fails to make a payment to one or more employees as described
in paragraph (1) of subdivision (b), or to provide an accurate
statement as described in paragraph (5) of subdivision (b), shall not
lose the affirmative defense set forth in subdivision (b) as a
result of that good faith error if the employer, within 30 days of
discovery or notice of the error, makes the payment described in
paragraph (1) of subdivision (b) together with accrued interest
calculated in accordance with subdivision (c) of Section 98.1 for any
delay in payment after December 15, 2016, to the employees and
accompanies the payment with an accurate statement as described in
paragraph (5) of subdivision (b). The employer shall have the burden
of proving that a failure to pay an employee was solely the result of
good faith error.
   (d) (1) The employer shall use due diligence, including, but not
limited to, the use of people locator services, to locate and pay
former employees who no longer work for the employer in the event
that former employees have relocated. For payments made to the Labor
Commissioner pursuant to paragraph (4) of subdivision (b), the
employer shall pay the Labor Commissioner an additional
administrative fee equal to one-half of 1 percent of the aggregate
payments made, or two thousand five hundred dollars ($2,500),
whichever is less, for deposit into the Labor Enforcement and
Compliance Fund.
   (2) Any payments made to the Labor Commissioner pursuant to
paragraph (4) of subdivision (b) shall be accompanied by a statement,
in both printed and electronic format, that identifies each employee
for whom payment is made, the amount payable to that employee, and
if available, the employee's last known address and social security
number.
   (3) The employer shall preserve all records of hours worked,
calculations of hours worked, and records of payments made to
employees and the Labor Commissioner pursuant to subdivision (b) and
this subdivision, until December 16, 2020, and furnish the records
related to an employee on request by the employee.
   (e) Beginning on January 1, 2016, and ending on July 1, 2016, if
the employer has not provided the notice required by paragraph (3) of
subdivision (b), or ending on December 15, 2016, if the employer has
provided the notice required by paragraph (3) of subdivision (b),
the statute of limitations shall be tolled for that period of time
for any claims based on failure to fully compensate employees
compensated on a piece-rate basis for rest and recovery periods and
other nonproductive time prior to January 1, 2016.
   (f) Any notice to the Labor and Workforce Development Agency on or
before December 31, 2015, pursuant to paragraph (1) of subdivision
(a) of Section 2699.3, 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, and
subject to the tolling provisions of subdivision (e), an aggrieved
employee or representative shall give written notice by certified
mail to both the Labor and Workforce Development Agency and the
employer of any violations based on failure to compensate employees
fully for rest and recovery periods and other nonproductive time.
   (g) The provisions in subdivisions (b), (c), (d), (e), and (f)
shall not apply to any of the following:
   (1) Damages and penalties previously awarded in an order or
judgment that was final and not subject to further appeal as of
January 1, 2016.
   (2) 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:
   (A) 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.
   (B) The claim was asserted against a defendant named with
specificity and joined as a defendant, other than as an unnamed (DOE)
defendant pursuant to Section 474 of the Code of Civil Procedure, in
the pleading referred to in subparagraph (A), or another pleading or
amendment filed in the same action prior to January 1, 2015.
   (3) Claims that employees were not advised of their right to take
rest or recovery breaks, that rest and recovery breaks were not made
available, or that employees were discouraged or otherwise prevented
from taking such breaks.
   (4) Claims for unpaid wages, damages, and penalties that accrue
after January 1, 2016.
   (5) 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.
   (6) An employer that is a new motor vehicle dealer, as defined by
Section 426 of the Vehicle Code.
   (h) Amendment to assert the affirmative defense provided in
subdivision (b) in actions filed on or after March 1, 2014, unless
final and not subject to further appeal as of January 1, 2016, shall
be permitted.
   (i) Nothing in this section 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 this code, any order of the Industrial Welfare
Commission, or any regulation adopted by the Department of Industrial
Relations or any of its divisions, other than actions or proceedings
based solely on the employer's failure to timely pay the
compensation due for rest and recovery periods.
   (j) Nothing in this section 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.
   (k) This section shall remain in effect only until January 1,
2021, and as of that date is repealed.
  SEC. 5.  Section 226.2 is added to the Labor Code, to read:
   226.2.  This section shall apply for employees who are compensated
on a piece-rate basis for any work performed during a pay period.
This section shall not be construed to limit or alter minimum wage or
overtime compensation requirements, or the obligation to compensate
employees for all hours worked under any other statute or local
ordinance. For the purposes of this section, "applicable minimum wage"
means the highest of the federal, state, or local minimum wage that
is applicable to the employment, and "other nonproductive time" means
time under the employer's control, exclusive of rest and recovery
periods, that is not directly related to the activity being
compensated on a piece-rate basis.
   (a) For employees compensated on a piece-rate basis during a pay
period, the following shall apply for that pay period:
   (1) Employees shall be compensated for rest and recovery periods
and other nonproductive time separate from any piece-rate
compensation.
   (2) The itemized statement required by subdivision (a) of Section
226 shall, in addition to the other items specified in that
subdivision, separately state the following, to which the provisions
of Section 226 shall also be applicable:
   (A) The total hours of compensable rest and recovery periods, the
rate of compensation, and the gross wages paid for those periods
during the pay period.
   (B) Except for employers paying compensation for other
nonproductive time in accordance with paragraph (7), the total hours
of other nonproductive time, as determined under paragraph (5), the
rate of compensation, and the gross wages paid for that time during
the pay period.
   (3) (A)  Employees shall be compensated for rest and recovery
periods at a regular hourly rate 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.
   (B) For employers who pay on a semimonthly basis, employees shall
be compensated at least at the applicable minimum wage rate for the
rest and recovery periods together with other wages for the payroll
period during which the rest and recovery periods occurred. Any
additional compensation required for those employees pursuant to
clause (i) of subparagraph (A) is payable no later than the payday
for the next regular payroll period.
   (4) Employees shall be compensated for other nonproductive time at
an hourly rate that is no less than the applicable minimum wage.
   (5) 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.
   (6) 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 statutory civil penalties, including, but not
limited to, penalties under Section 226.3, or liquidated damages
based solely on that error, provided that both of the following are
true:
   (A) The employer has provided the wage statement information
required by subparagraph (B) of paragraph (2) and paid the
compensation due for the amount of other nonproductive time
determined by the employer in accordance with the requirements of
paragraphs (4) and (5).
   (B) The total compensation paid for any day in the pay period is
no less than what is due under the applicable minimum wage and any
required overtime compensation.
   (7)  An employer who, in addition to paying any piece-rate
compensation, pays an hourly rate of at least the applicable minimum
wage for all hours worked, shall be deemed in compliance with
paragraph (4).
   (b) This section shall become operative on January 1, 2021.
  SEC. 6.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.