LAWSUIT FILED TO INVALIDATE PIECE-RATE SAFE HARBOR CARVE-OUTS
FELS has provided eNews readers with regular updates on the passage and implementation of AB 1513, legislation to provide clear guidance to employers using piece-rate compensation and to provide a “safe harbor” for employers who did not compensate piece-rate employees as required by 2013 California appellate court decisions in the Bluford and Gonzales cases. Those cases provided employees had to be compensated separately from piece-rate producing time for rest, recovery, and other non-productive time.
Because it had long been assumed that averaging piece-rate earnings over hours worked met the minimum wage requirements, Bluford and Gonazles created massive litigation exposure for employers using piece-rates because the statute of limitations for claims of undercompensation is four years. Dozens of lawsuits had been filed and many settled with massive wage, damage and penalty awards after Bluford and Gonzales were handed down. AB 1513 provided a safe harbor that permitted employers to make back-wage payments to piece-rate compensated employees and escape penalty and damage liability.
However, AB 1513 also included limitations making the safe harbor relief unavailable to several employers locked in piece-rate litigation. Two of those employers brought suit in United States District Court for the Eastern District of California on Jan. 22, alleging these restrictions on the availability of the AB 1513 safe harbor violate their constitutional rights.
Fowler Packing Company and Gerawan Farming allege that provisions of AB 1513 that do not allow the safe harbor to apply to any non-productive wage and hour claim brought before March 1, 2014 illegally excluded Gerawan Farming from safe harbor relief. They also claim that the provision of AB 1513 excluding “claims for paid rest or recovery periods or pay for other non-productive that were made in any case filed prior to April 1, 2015” illegally excludes Fowler Packing from safe harbor relief.
The plaintiffs claim that the date restrictions for availability of safe harbor relief in AB 1513 amount to a violation of their constitutional rights to their detriment and to the detriment of any of their employees who might have benefited from back-pay payments made under the AB 1513 safe harbor.