Many employers, particularly in the construction and farming industries, compensate their employees on a piece-rate basis. With the passage of Assembly Bill No. 1513, effective January 1, 2016, Labor Code Section 226 was amended to require those employers that pay their workers on a piece-rate basis to:
AB 1513 also provides two formulas employers can use to provide “back pay” for previously uncompensated rest and recovery periods and other nonproductive time.
WCIRB staff has reviewed AB 1513 in the context of both the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 (USRP) and the WCIRB California Test Audit Program and provides the following guidance:
Compensation for Rest or Recovery Periods – Impact of Remuneration:
In accordance with the USRP at Part 3, Section V, Rule 1, Payroll – Remuneration, any compensation paid for rest or recovery periods or other nonproductive time as contemplated under AB 1513 shall be included as remuneration. (Such payments have always been considered remuneration.)
Back Pay for Rest or Recovery Periods – Impact of Remuneration:
The USRP at Appendix II, Payroll/Remuneration Table, under “Back Wages/Back Pay”, provides that back pay to address wages that should have been paid in a policy period other than the one being audited is not to be considered remuneration in the current audit.
Determination of Regular Hourly Wage:
Remuneration for rest or recovery periods and other nonproductive time is used in determining an employee’s regular hourly wage as directed by the USRP at Part 3, Section IV, Rule 2(a)(3)(a), Regular Hourly Wage Calculation, "…an employee’s regular hourly wage shall be calculated by dividing each employee’s total remuneration by the number of hours worked during the pay period…."
Determination of Overtime for Piece-Rate Workers:
For procedures on handling piecework overtime remuneration, refer to Part 3, Section V, Payroll – Remuneration, Rule 1c, Overtime Remuneration.
Applicability to Test Audit Program:
Consistent with the above referenced USRP rules, when conducting Test Audits, the WCIRB will include as remuneration any documented pay for rest or recovery periods or other nonproductive time – provided the pay is for rest or recovery periods or other nonproductive time that occurred during the period being audited. The WCIRB will not include as remuneration any back pay that is for policies other than the one being audited.
The WCIRB will continue to monitor the impact of AB 1513 to determine if any clarifications are required to the USRP.