How does an employer determine the average hourly rate to be paid for rest and recovery periods?
The formula for determining the average hourly rate to be paid for rest and recovery periods is set forth in the statute, as follows:
Divide the total compensation for the workweek, exclusive of compensation for rest and recovery periods and any premium compensation for overtime, by the total hours worked during the workweek, exclusive of rest and recovery periods.”
(Labor Code §226.2(a)(3)(i).)
The following are some examples of application of this formula.
Examples:
1. For a workweek of piece-rate compensation only:
- A piece-rate employee works a 5-day, 40-hour workweek.
- The employee has two 10-minute rest periods authorized and permitted per day, for a total of 100 minutes (1.67 hours) of rest periods for the workweek.
- The employee earns $500 in piece-rate compensation for the workweek.
| The average hourly rate to be paid for the rest periods for this employee is calculated as follows: | ||
|---|---|---|
| $500 | Total compensation not including compensation for the rest periods | |
| ÷ | 38.33 | Total hours less rest periods |
| = | $13.04/hr x 1.67 hrs |
Rest periods for the workweek |
| = | $21.78 | Compensation for rest periods for the workweek |
| Total compensation for the workweek: | ||
| $500 | Piece-rate compensation | |
| + | $21.78 | Compensation for rest periods |
| = | $521.78 | |
2. For a workweek of piece-rate compensation and a base rate of minimum wage for all hours worked:
- An employee works a 5-day, 40-hour workweek.
- The employee has two 10-minute rest periods authorized and permitted per day, for a total of 100 minutes (1.67 hours) of rest periods for the workweek.
- The employee is paid minimum wage ($10/hour) for all hours worked, including the two 10-minute rest periods, for a total of $400.
- The employee also earns a total of $300 in piece-rate compensation for the workweek.
| The average hourly rate to be paid for the rest periods for this employee is calculated as follows: | ||
|---|---|---|
| $683.30 | Total compensation for the workweek, not including compensation for rest and recovery periods, which is the $300 in piece-rate compensation, plus the minimum wage paid for all hours worked except the 1.67 hours of rest period time | |
| ÷ | 38.33 | Total hours less rest periods |
| = | $17.83/hour | Note: $10/hour of this time is already calculated into and paid in the employee’s minimum wage of $10/hour for all hours worked, including the rest period time.
Therefore, the additional amount owed for rest periods under this example is $7.83/hour. |
| Total compensation for the workweek: | ||
| $400 | Minimum wages for all hours worked, including the rest period time | |
| + | $300 | Piece-rate compensation |
| + | $7.83 x 1.67 hours = $13.08 | Additional amount over minimum wage required to pay correct average hourly rate for rest periods |
| = | $713.08 | |
3. For a workweek with both piece-rate work and hourly work:
- An employee works a 5-day, 40-hour workweek.
- On two 8-hour days of this workweek (for a total of 16 hours), the employee works at an hourly rate of $10/hour, and does no piece-rate work.
- On the other three days of the week (for a total of 24 hours), the employee does piece-rate work only and earns a total of $300 in piece-rate compensation.
- On each day of the workweek, the employee has two 10-minute rest periods authorized and permitted, for a total of 100 minutes (1.67 hours) of rest periods for the workweek.
- On the two hourly-work days, these rest periods are compensated at the $10 hourly wage.
| The average hourly rate to be paid for the rest periods for this employee is calculated as follows: | ||
|---|---|---|
| $453.30 | Total compensation for the workweek, not including compensation for rest and recovery periods, which is the $300 in piece-rate compensation, plus the $160 for hourly work, less $6.70, which is the compensation for the 40 minutes of rest and recovery periods on the two hourly-rate days. | |
| ÷ | 38.33 | Total hours, which is 40 hours less the 1.67 hours of rest period time |
| = | $11.83/hour | Note: For the days on which the employee worked at an hourly rate, $10/hour of this time is already been paid as part of the hourly rate. For those two days, the employee is owed only an additional $1.83/hour for the rest periods. For the days on which the employee did piece-rate work, the rate to be paid for the rest periods is $11.83. |
| Total compensation for the workweek: | ||
| $160 | For the hourly rate worked on two days | |
| + | $300 | Piece-rate compensation |
| + | $1.83 x .67 hours = $1.23 | The additional amount owed for the rest periods on the hourly rate days to bring them to the average hourly rate for the workweek. |
| + | $11.83 x 1.0 hour | For the rest periods on the piece-rate days |
| = | $473.06 | |
4. For a workweek of piece-rate compensation and overtime hours:
- An employee works a 6-day, 47-hour workweek, for which 7 hours constitute overtime.
- The employee has two 10-minute rest periods authorized and permitted per day, for a total of 120 minutes (2.0 hours) of rest periods for the workweek.
- The employee earns a total of $800 in piece-rate compensation for the workweek.
| The average hourly rate to be paid for the rest periods for this employee is calculated as follows: | ||
|---|---|---|
| $800 | Total compensation for the workweek, not including compensation for the rest and recovery periods or premium pay for overtime. | |
| ÷ | 45 hours | Total hours, not including the rest and recovery periods. |
| = | $17.78/hour
x 2.0 hours = $35.56 |
Compensation for rest and recovery periods for this workweek. |
| The overtime premium compensation for this employee is: | ||
| $800 | Piece-rate compensation | |
| + | $35.56 | Compensation for rest and recovery periods |
| = | $835.56 | |
| ÷ | 47 hours | |
| = | 17.78/hour | Regular rate of pay |
| x | .5 | |
| = | $8.89 | Premium pay due for overtime hours |
| x | 7 hours | Overtime hours |
| = | $62.23 | |
| Total compensation for the workweek: | ||
| $800 | Piece-rate compensation | |
| + | $35.56 | Compensation for rest and recovery periods |
| + | $62.23 | Premium pay for overtime hours |
| = | $897.79 | |
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