Piece rate: What type of records does the employer have to provide concerning the payments that are made to employees for the purpose of obtaining the affirmative defense?
When an employer elects to make payments to current and former employees pursuant to subdivision (b) of the statute, the employer is required to provide the employee, along with the payment, a statement that, in general terms, explains that the payment is made pursuant to this statute, explains which of the formulas was used to determine the payment (i.e., whether it was actual sums due or the 4%-option), and explains the calculations that were made to determine the total payment.
Specifically:
- If the payment is based on “actual sums due” option, the employee must be provided “a statement, spreadsheet, listing, or similar document that states, for each pay period for which compensation was included in the payment, the total hours of rest and recovery periods and other nonproductive time of the employee, the rates of compensation for that time, and the gross wages paid for that time.”
- If the payment is based on the “4%” option, the employee must be provided “a statement, spreadsheet, listing, or similar document that shows, for each pay period during which the employee had earnings during the period from July 1, 2012, through December 31, 2015, inclusive, the gross wages of the employee and any amounts already paid to the employee, separate from piece-rate compensation, for rest and recovery periods and other nonproductive time.”
- Both types of statements must show “the calculations that were made to determine the total payment made.”
Note that under the 4% option an employer is only required to pay an employee an amount “equal to 4 percent of that employee’s gross earnings in pay periods in which any work was performed on a piece-rate basis from July 1, 2012, to December 31, 2015, inclusive, less amounts already paid to that employee, separate from piece-rate compensation, for rest and recovery periods and other nonproductive time during the same time, . . . .” In other words, the 4% only applies to pay periods in which some work was performed on a piece-rate basis. For purposes of showing the employee how the amount of the payment was determined, however, subdivision (b)(5)(D) requires a statement or similar document that includes all pay periods for which the employee had earnings during the July 1, 2012 to December 31, 2015 time period. This serves the purpose of showing the employee, if relevant, that there may have been pay periods in which he or she did not have any piece-rate earnings, and that the 4% calculation was thus not applied to those pay periods. The purpose of the statement that is required by this provision of the statute is simply to show the employee how the payment was calculated in terms of his or her own earnings history.
In addition, subdivision (d)(3) of the statute requires employers to preserve “all records of hours worked, calculations of hours worked, and records of payments made to employees and the Labor Commissioner pursuant to subdivision (b) and this subdivision, until December 16, 2020, and furnish the records related to an employee on request by the employee.”
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