April 7, 2015

WG Lawsuit Challenges Piece Rate Rest Period Compensation Policy

Western Growers, along with a coalition of agricultural trade associations, has filed a lawsuit against Labor Commissioner Julie Su and the Division of Labor Standards Enforcement challenging the labor commissioner’s policy that employers who pay employees on a piece-rate basis must pay those employees their average hourly piece-earning rate for rest periods. 

The labor commissioner’s position conflicts with long-standing guidance from the Division of Labor Standards Enforcement, the Industrial Wage Commission and a recent California appellate court decision.  (Bluford v. Safeway Stores, Inc. –2013).

Given the uncertainty this contradiction creates for employers, and especially the exposure to class-action lawsuits, we are compelled to bring legal action. The lawsuit consists of a petition for writ of mandate and complaint for declaratory and injunctive relief in Superior Court in Sacramento County.  The coalition also includes Ventura County Agricultural Association, Grower-Shipper Association of Central California and Nisei Farmers League. 

The labor commissioner’s declaration took the form of an internal memorandum to her enforcement staff and a document quietly posted on the Division of Industrial Relations website providing an “example” of proper rest period compensation for piece-rate employees.  The labor commissioner failed to follow state law requiring an open and public rule-making process, resulting in an “underground regulation.”

As a result, thousands of California employers have been exposed to potential class-action lawsuits, with retroactive liability, due to the confusion about the labor commissioner’s policy, its enforceability and the conflicting ruling by the appellate court.  The Bluford court held that rest periods for piece-rate employees must be compensated separately from productive time worked, but that the rate of rest period compensation must be “either the minimum wage or the contractual hourly rate.”

At least one employer has been subjected to an enforcement action by the labor commissioner under this policy.  Several other employers have been persuaded by the labor commissioner to agree to this policy as a condition of settling class-action lawsuits stemming from the Bluford decision.  

For more than a year, WG and other organizations have relayed our concerns to state officials. Repeated requests that the labor commissioner withdraw her declared policy and clarify that the Bluford decision should guide employers of piece-rate employees have been rejected.