84 Litigating CA Wage & Hour Class and PAGA Actions (23rd 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.406 The defendants demurred to the association of employers’ complaint, which the trial court sustained without leave to amend.407 The Court of Appeal affirmed the trial court’s ruling and held that Section 226.2 was constitutional.408 C. Neutral Time-Rounding Practices: Federal Law vs. California Law 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.409 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.410 In 2012, the Court of Appeal in See’s Candy Shops, Inc. v. Superior Court held that a rounding policy is permissible under California law if it is “fair and neutral” on its face and is “used in such a manner that it will not 406 Nisei Farmers League v. California Labor and Workforce Development Agency, 30 Cal. App. 5th 997 (2019). 407 Id. at 1002-03. 408 Id. at 1003. 409 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). 410 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.
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