Recent Changes In California Employment Law

Article by Sabrina L. Shadi, Jeffrey C. Bils, and Hannah Bloink (Summer Associate)

As 2016 approaches, we wanted to highlight the following changes to California law for the new year.

PAGA Amendment Provides Chance to Cure Certain Paystub Violations

Assembly Bill 1506 amends the Private Attorneys General Act ("PAGA") to rein in actions asserting noncompliance with itemized wage statement requirements contained in California Labor Code Section 226(a). Section 226(a) requires, among other things, that employers provide their employees with wage statements that contain the inclusive dates of the period for which the employee is paid, as well as the name and address of the legal entity that is the employer.

Pursuant to this amendment, employers have 33 calendar days after the postmark date on a written notice describing an alleged violation to "cure" such wage statement problems and avoid a PAGA lawsuit. To take advantage of the amendment, employers must give fully compliant itemized wage statements to all allegedly aggrieved employees for each pay period in the three years prior to the date of the written notice. However, the bill limits an employer's right to cure such problems to once in a 12-month period. In addition, while the amendment allows an employer a window of time to cure noncompliant statements before an employee may bring a PAGA claim, it does not affect an employee's ability to seek statutory penalties under Section 226(e) for the same wage statement deficiencies.

Piece Rate Compensation

Assembly Bill 1513 creates the new California Labor Code Section 226.2, which requires employers to pay employees who are compensated on a piece-rate basis for rest and recovery periods and "other nonproductive time" separately from any piece-rate compensation. Employers will be required to compensate employees for rest and recovery periods and "other nonproductive time" at the following rates:

Rest and Recovery Periods: No less than the higher of minimum wage or an average hourly rate, which is determined by dividing the total compensation for the workweek (not taking into consideration compensation for rest and recovery periods or any premium compensation for overtime) by the total hours worked during the workweek (not including rest and recovery periods).

Other Nonproductive Time (defined as 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): No less than the minimum wage. However, an employer who pays an hourly rate of at least the applicable minimum wage for all hours worked, in addition to any piece-rate compensation, will be considered compliant with Section 226.2.

The new law also requires that the itemized wage statements employers provide to employees compensated on a piece-rate basis include the following items: 1) the total hours of compensable rest and recovery periods, as well as the rate of compensation and gross wages paid for such periods; and 2) the total hours of other nonproductive time, along with the rate of compensation and the gross wages paid during such periods.

Moreover, the new law provides that employers have an affirmative defense for any claim for recovery of wages, damages, liquidated damages, statutory penalties, or civil...