Monday, January 7, 2019
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Court of Appeal:
New Piece-Rate Wage Law Is Constitutional
By a MetNews Staff Writer
The Fifth District Court of Appeal on Friday declared a recently-enacted law governing piece-rate wages—based not on hours worked, but tasks completed—constitutional, affirming the dismissal of a challenge to the law by two employer groups that sought to have it declared void for vagueness.
The opinion, filed Friday, was penned by Acting Presiding Justice Herbert I. Levy. It affirms the judgment of dismissal by Fresno Superior Court Judge Donald S. Black after he sustained the defendants’ demurrer without leave to amend.
The plaintiffs, Nisei Farmers League and the California Building Industry Association, sued various state agencies and officials responsible for enforcing Labor Code §226.2, which went into effect in 2016 and codified an earlier common-law scheme for calculating piece-rate wages. Besides claiming the statute is too vague, the plaintiffs also argued that it unconstitutionally applies retroactively, a contention which the Fifth District also rejected.
Piece-Rate Payment
Under the metric, originally set forth in two 2013 Court of Appeal cases—Gonzalez v. Downtown LA Motors, LP from this district and Bluford v. Safeway, Inc. from the Third District—employees who are compensated based on their output rather than their time worked must nevertheless be paid at least minimum wage for downtime and rest periods.
Specifically, §226.2(a)(1) says:
“Employees shall be compensated for rest and recovery periods and other nonproductive time separate from any piece-rate compensation.”
Sec. 226.2(b) provided a “safe harbor” for employers, permitting them to avoid penalties for violations occurring prior to Jan. 1, 2016 by paying their employees for any undercompensated periods worked from July 2012 through December 2015. Sec. 226.2(b)(1)(A) requires that an employer taking advantage of this safe harbor “determines and pays the actual sums due together with accrued interest calculated in accordance with” a Labor Code section governing such calculations.
The plaintiffs brought eight causes of action challenging the law. Black adopted the reasoning of the defendants in sustaining their demurrer, agreeing that the language of the statute is sufficiently clear and that it does not in fact apply retroactively.
On appeal, the employer groups argued that they still don’t know the meaning of the statute’s use of the terms “other nonproductive time” and “actual sums due.”
‘Other Nonproductive Time’
Levy said:
“The statue explicitly defines ‘other nonproductive time’ to mean ‘time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.’ (§ 226.2.) The language of the statutory definition is reasonably clear and specific and provides adequate notice of the nature of the conduct that is being described.”
He added:
“Moreover, the concept of ‘other nonproductive time’ did not arise in a vacuum. As we discussed previously herein at length, section 226.2, subdivision (a), was directly premised on the Gonzalez and Bluford Court of Appeal decisions relating to how piece-rate wages must be paid. In fact, section 226.2, subdivision (a), was enacted to clarify the statutory requirements for piece-rate compensation by codifying the Gonzalez and Bluford decisions….Thus, the Gonzalez and Bluford decisions provide helpful context for understanding the meaning of section 226.2.”
He went on to say that Gonzalez made it clear that time spent at work but not directly working on a piece-rate related task, such as the Gonzalez plaintiff’s time as a mechanic waiting for a customer and not repairing a vehicle, is nonproductive time which must be compensated.
No Retroactivity
The jurist summed up the plaintiffs’ argument that the statute is retroactive, saying:
“The crux of these claims was that, with respect to the affirmative defense set forth in subdivision (b) of section 226.2 available to employers that are willing to pay ‘actual sums due’ for previously (i.e., pre-2016) unpaid compensation for employees’ rest periods and ‘other nonproductive time,’ the statute imposed new substantive requirements on employers retroactively.”
He adopted Black’s rejection of this argument. The trial judge said:
“Section 226.2 merely provides an affirmative defense for employers who follow the specified procedures and pay amounts already owed for piece-work prior to the start date. There is nothing in the Section that revises how the amounts owed for prior work is calculated.…
“The statute as written does not appear to apply retroactively. Since it does not apply retroactively, then Plaintiff has not stated a cause of action….”
Levy added:
“Accordingly, for purposes of the affirmative defense set forth in section 226.2 subdivision (b), the ‘actual sums due’ for previously unpaid compensation would be the sums due under the existing law prior to 2016—that is, the amounts that were due under the law in effect at the time the obligation to pay the compensation accrued.”
Declaratory Relief Inappropriate
Turning to the plaintiffs’ contention that they were entitled to declaratory relief, Levy noted that they were in essence seeking an answer to what the law was prior to 2016, which they were required to comply with in order to take advantage of the new statute’s safe harbor provision.
He said:
“The clear answer to that question is that the piece-rate compensation law generally in effect prior to the January 1, 2016, enactment of section 226.2 was Gonzalez and Bluford, at least from the time of the issuance of those decisions in 2013….Generally speaking, then, after Gonzalez and Bluford were final, employers would have been required to separately compensate piece-rate employees for nonproductive/uncompensated time (i.e., time spent on non-piece-rate activities directed by the employer) and for rest periods. Also, we note that this conclusion is consistent with the main point for creating the affirmative defense, which was to provide a safe harbor to employers who were caught off guard by the changes caused by the Gonzalez and Bluford decisions to the piece-rate law.”
The court assumed, without deciding, that under the pre-2016 state of the law, an employer could devise a payment scheme distinguishable from the two controlling cases which would pass legal muster.
“[G]iving plaintiffs the benefit of the doubt on this question,” he said, “we do not have enough facts to render the kind of decision requested, and to do so based on generalized hypotheticals and propositions rather than on a concrete case and controversy would be a granting of an advisory opinion, which we may not do.”
The case is Nisei Farmers League v. California Labor and Workforce Development Agency, 2019 S.O.S. 109.
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