66 Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) Seyfarth Shaw LLP | www.seyfarth.com Second, employers must also pay piece-rate employees for “other non-productive” time (time when an employee is under the employer’s control, but is not engaged in activity directly related to the piece-rate activity) at a rate that is no less than the minimum wage. If an employer pays employees a base hourly rate for all hours worked in addition to piece-rate wages, then the employer need not pay amounts in addition to this hourly rate for the “other non-productive time.” But the employer still must pay the hourly rate for rest and recovery periods. Third, Section 226.2 makes wage statement compliance for piece-rate employers even more complex and burdensome. The statute requires that wage statements for employees paid on a piece-rate basis contain the total hours of compensable rest and recovery periods, the rate of pay for those periods, and the gross wages paid for those periods during the pay period. If employers do not pay a base hourly rate for all hours worked (in addition to piece-rate wages), then the employer must also list the total hours of other non-productive time, the rate of compensation for such time, and the gross wages paid for such time during the pay period. Section 226.2 does not contain a collective bargaining exemption, and thus applies even to employers of unionized employees. Associations of employers brought a declaratory judgment action against state labor agencies and agency officials, challenging the constitutional validity of Section 226.2 on the basis that the statute was void for vagueness.374 The defendants demurred to the association of employers’ complaint, which the trial court sustained without leave to amend.375 The Court of Appeal affirmed the trial court’s ruling and held that Section 226.2 was constitutional.376 C. Neutral Time-Rounding Practices Are Lawful Federal law allows employers to use a neutral practice of rounding reported time, up or down, as long as the overall effect is not to underpay employees for their time.377 Under one such policy, for example, employees who work between 1 and 7 minutes during a quarter-hour segment of time would have their time rounded down, while those who work between 8 and 14 minutes would be paid for a full 15 minutes.378 Until the 2012 Court of Appeal holding in See’s Candy Shops, Inc. v. Superior Court,379 California law did not expressly permit rounding, thus giving rise to lawsuits contending that employees were not being compensated at the minimum wage for all hours worked under Labor Code section 1194. In See’s Candy, the employer used a timekeeping software system that required employees to punch in at the beginning and out at the end of their 374 Nisei Farmers League v. California Labor and Workforce Development Agency, 30 Cal. App. 5th 997 (2019). 375 Id. at 1002-03. 376 Id. at 1003. 377 See 29 C.F.R. § 785.48(b); see also Corbin v. Time Warner Entm't-Advance/Newhouse P’ship, 821 F.3d 1069, 1075-76 (9th Cir. 2016); Alonzo v. Maximus, Inc., 832 F. Supp. 2d 1122, 1127-29 (C.D. Cal. 2011) (facially neutral policy rounding time to the nearest quarter hour was proper). 378 All timekeeping systems employ rounding at some point, whether to the minute, second, or tenth of a second. The discussion of rounding here generally applies to situations where rounding is done in increments greater than the nearest minute. 379 See’s Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889 (2012).
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