California law requires that employers authorize and permit their employees to take rest periods based on the total hours worked in a day. Employers must authorize and permit 10 minutes net rest time for every four hours worked or major fractions of an hour. If the workday is less than three and one-half hours, then no rest period is required. Even though no work is performed, employers must consider rest periods as compensable time worked.

New Rest Period Requirements For Piece-Rate Workers 

Recently, the legislature placed substantial new requirements on employers with employees who are compensated on a piece-rate basis for any work within a pay period.

With respect to rest periods, Section 226.2 now requires that employers compensate piece-rate employees for rest periods separately from any other piece-rate compensation. Section 226.2 further requires that rest period time be paid at the higher of either the minimum wage or a special premium rate, which is an average hourly rate that is determined by applying a formula set forth in the statute. Specifically, an employer must divide the total compensation earned by the employee in the workweek, excluding compensation for rest or recovery periods and premium compensation for overtime, by the total hours worked during the workweek, exclusive of rest and recovery periods, to determine the rate that must be paid for rest period time.

Section 226.2 also requires that the itemized wage statements that employees receive separately state the total hours of “compensable” rest periods, the rate of compensation and the gross wages paid for those periods during the pay period.

While Section 226.2 requires that rest periods be separately compensated and reported on the employees’ itemized wage statements, neither California law nor Section 226.2 requires that an employee record his or her rest periods. This raises the question: how can an employer compensate its employees for rest periods if it does not require that its employees record their rest periods?

In late December 2015, the Department of Labor Standards Enforcement (DLSE) issued guidance regarding Section 226.2. In that guidance, the DLSE posed the question, “Does new Labor Code section 226.2 mean that employers will need to track the number of minutes that employees actually take for their rest and recovery periods?” To which the DLSE’s response was:

No. New section 226.2, subdivision (a)(2) requires that an employee’s itemized wage statement state ‘[t]he total hours of compensable rest and recovery periods, the rate of compensation, and the gross wages paid for those periods during the pay period.’ (Emphasis added.)

If an employer has authorized and permitted two 10-minute rest periods during an employee’s work shift….the “compensable rest and recovery periods are those that have been authorized and permitted according to existing law. That is the amount of time for which an employee must be compensated (i.e., the ‘compensable’ period), and which must be itemized on the wage statement, regardless of whether the employee actually took 8 minutes on one rest period (less than the amount of time that was ‘compensable’), or took 13 minutes on another rest period (more than the amount of time that was ‘compensable.’)

Thus, according to the DLSE’s guidance, an employer does not have to record rest periods; it only must pay for “compensable” rest period time. It is important to remember, however, that the guidance that the DLSE has provided does not have the force of law. As such, careful thought should be given and legal guidance should be sought in determining an appropriate compliance plan.