California Court of Appeal: rest periods must be separately compensated for employees paid on a piece rate

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Continuing the trend established by Downtown LA Motors, where employees paid on a piece rate were required to be paid at least the minimum wage for hours spent waiting to perform work, the California Court of Appeals in Bluford v. Safeway Stores Inc. has signaled that employers should be careful when utilizing alternative wage schemes for work done by employees. 

 

Bluford involved unionized truck drivers who worked throughout Northern California.  The compensation scheme at issue was developed through collective bargaining between the plaintiffs’ representative (General Teamsters Local 439) and Safeway.  Rather than paying the drivers an hourly rate, however, the collective bargaining agreement uses an activity-based compensation system to determine the drivers’ wages, based on a mileage rate for miles driven and different rates for other tasks.  Drivers logged their mileage and activity both manually via trip sheets and electronically through an onboard computer system, neither of which provided a means of recording rest breaks.  Importantly here, there was not a separate rate for paid rest periods, nor was there any other indication on the employees’ wage statements that time spent on rest breaks would be paid.    

 

The CBAs did, however, include a lawful paid rest period policy.  Safeway also took many precautionary steps to ensure that its drivers took their breaks, such as requiring the drivers to sign the back of their trip sheets to certify that they were authorized and permitted to take their rest breaks.   

 

Safeway argued that it complied with California’s wage order, because the wage order only required that time spent on a rest period could not be deducted from an employee’s wage.  Safeway contended that there was no deduction for rest breaks and that the mileage rates negotiated in the collective bargaining agreement included rest break pay. 

 

The Court of Appeal disagreed, finding that even though Safeway had a policy to provide paid rest periods, under a piece-rate system rest periods must be separately compensated.  By failing to compensate separately for rest periods, Safeway’s policy was akin to averaging hourly compensation and thus not in compliance with California minimum wage law, even if the mileage rates and activity rates were negotiated to include payment for expected rest breaks.   

 

This case is important for all employers who pay at a piece rate, load rate or daily rate.  In the past, employers using alternative pay structures could rely on communications with employees that rest periods were included in these rates. But this may no longer be enough. 

 

Not only is this decision a good reminder that employers should have lawful rest period policies and ensure that rest periods are being made available on a daily basis, but Bluford also indicates that: 

  • Wage statements reflecting alternate pay structures should include a separate line item to note that rest periods are being paid and
  • There should be clear communication about what is included in the alternative pay structure, so employees have a clear understanding that they are being compensated for their on-duty breaks.