Piece rate: What is “accrued interest calculated in accordance with subdivision (c) of Labor Code 98.1”? How is that interest calculated?

Labor Code section 98.1(c) provides for interest to accrue on all unpaid wages, from the date wages were due and payable, at the rate specified in subdivision (b) of Civil Code section 3289. The rate specified in Civil Code section 3289(b) is ten percent per annum simple interest.

The “date wages were due and payable” refers to the payday when the wages originally were due, and for purposes of Labor Code section 226.2, subdivision (b), corresponds to each payday covering work within the back pay period from July 1, 2012 through December 31, 2015. A different interest calculation is required for each payroll period for which any wages are due, extending from that payday until the date of payment. Thus, assuming the employer made these payments in July of 2016, exactly four years after the earliest payday in the period, it would require four years interest (4 years times 10% = 40%) on the additional wages due for that first pay period in July of 2012; and then 3 years and however many weeks interest on the wages due for the following payday; etc.; until arriving at the end of December of 2015, for which there would about 5% interest would have been required (10% per annum times six months = 5%).

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