A California appellate court ruled yesterday that workers paid on a commission basis must be separately compensated for legally required rest periods (Vaquero v. Stoneledge Furniture LLC). When combined with a state Supreme Court ruling late last year requiring employers to provide workers with duty-free rest breaks, this one-two punch of court decisions will force many California employers to alter their pay practices or face potentially devastating financial consequences.
Background: Open Question Regarding Rest Periods
Under the Wage Orders promulgated by the Industrial Welfare Commission, California employers have long been required to provide non-exempt employees working at least 3.5 hours in a workday with a paid 10-minute duty-free rest period for each four hours of work or major fraction thereof. Rest period time must be counted as hours worked “for which there shall be no deduction from wages.”
For employees paid by piece rate, California courts have interpreted this to mean that piece-rate employees must be paid separately for non-productive time, including rest periods. In 2013’s Bluford v. Safeway Stores, Inc., the California Court of Appeals case concluded that a piece-rate compensation formula that does not compensate separately for rest periods does not comply with California minimum wage law.
When the California legislature passed AB1513 and created Labor Code section 226.2, effective January 1, 2016, it established a special rate of pay to be provided to piece-rate employees on rest and recovery periods: the applicable minimum wage or the average productive rate, whichever is greater. These amounts were in addition to compensation for “other non-productive time” at only the applicable minimum wage.