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California – Piece-Rate Compensation Requirements

On October 10, 2015, California Governor Jerry Brown signed Assembly Bill 1513 which added new requirements with regard to employees who work on a piece-rate basis.

New Compensation Requirements

Piece rate and commission-paid employeees must receive at least the minimum wage. Piece rate employees must also be paid at least the minimum wage for all time spent on tasks not specifically included in the piece rate.

Under the new law, employers are required to compensate employees who are paid on a piece-rate base for rest and recovery periods and other nonproductive time separate from any piece-rate compensation. The law defines “other nonproductive time” as “time under the employer’s control, exclusive of the rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.”

California Employee laws can be summarized by the following article from Fox Rothschild, LLP Attorneys at Law.

Employee With 6-Figure Income Sues Employer for Not Paying Minimum Wage… Wait, What?!?!

Same case from another law group – Law360

What does a salon do?

After reading the articles and understanding the new law, I don’t see how a salon can afford to continue to pay commission. One of our more aggressive owners in another state eliminated commission from his salon and pays everyone an hourly rate. He does this by doing a quarterly review of his employees using the Performance Recap Report under Reports, Owner Reports & Date Range. Each quarter the employees productivity is analyzed and a new hourly rate is determined for the next quarter. The Report shows the Service Sales, Service Commission, Retail Sales, Retail Commission and hours scheduled. Using that report the computer determines the average hourly rate for the time period. That hourly rate is then paid for the next quarter. Each quarter the hourly rate is adjusted to capture the employees productivity.

Hopefully, by setting an hourly rate each quarter the mandates specified by Assembly Bill 1513 can be satisfied. I would suggest consulting legal advice in this matter.

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