California Auto Dealers: Re-Check Your Pay Plans And Wage Statements Before January 1, 2016

On October 10, 2015, Governor Jerry Brown signed AB 1513 into law creating a new California Labor Code § 226.2 (effective January 1, 2016), which rewrites and redefines the rules governing piece-rate compensation in California.

Section 226.2 codifies the California Courts of Appeal decisions in Gonzalez v. Downtown LA Motors, 215 Cal.App.4th 36 (2013) and Bluford v. Safeway Stores, Inc., 216 Cal.App.4th 864 (2013) and answers some important questions left open by these decisions. Although primarily negotiated by agricultural interests, section 226.2 applies to all piece-rate compensation plans, including the auto industry. Therefore, auto dealers paying on a piece-rate basis must:

  1. Separately compensate employees for time spent taking rest breaks

The compensation for rest and recovery periods must be no lesser than the greater of: (1) the applicable minimum wage OR (2) the average hourly rate for all hours worked (exclusive of break time) during the work week. 2. Separately compensate employees for "other

"Other nonproductive time": Time under the employer's control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on the piece-rate basis. "Other nonproductive time" must be compensated at a rate not less than the applicable minimum wage. An employer may pay "other nonproductive time" based on either: (1) records of the actual time worked by the employee OR (2) the employer's "reasonable estimate" of such "other nonproductive time" work. 3. Provide additional relevant information on required wage statements

Wage statements must include: the hours spent on rest breaks, the rate paid for such rest breaks, the gross wages paid for such rest breaks, hours spent on "other nonproductive time," the rate paid for such "other nonproductive time," and the gross wages paid for such "other nonproductive time." What does this mean for California Automotive Dealerships?

Now is the best time for California auto dealers to re-check their pay plans...

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