California Law Regulates Piece-Rate Payers

'Safe harbor' protection closes July 1 for employers including grapegrowers

by Jane Firstenfeld
wine vineyard piece rate work pruning regulations compensation
Piece-rate compensation, common for vineyard tasks such as pruning, will be subject to new regulations in California. Photo: Sonoma County Vintners
Sacramento, Calif.—A new California law that went into effect in January 2016 presents problems for employers who pay their workers piece-rate (rather than hourly) wages. AB 1513 requires companies to separate piece-work compensation from rest and recovery (R&R) breaks and other “non-productive” time on the job.

Employers may still take advantage of a “safe harbor” provision to pay back wages in exchange for relief from statutory penalties and other damages, but repayment plans must be in place by July 1. Details are provided here. Agriculture employers also may find help from their farm-management software providers.

Piece-rate compensation is popular with productive workers and with employers, especially in this era when skilled vineyard workers are in short supply and high demand in California.

Although statistics were not available, according to Tyler Blackney, director of government relations for the California Association of Winegrape Growers (CAWG), “A lot of people do piece work. A lot of workers like it. This law will make it more complicated. I don’t know how HR (human resources) people will track it.”

Blackney said that even using “safe harbor” protection, back pay would amount to six figures for some agriculture companies. Factoring in California’s recent minimum wage increase, “It will be hard for some vineyards.”

Blackney stated: “This new piece-rate legislation is going to result in a number of our growers paying a substantial amount to avoid liability. Some are facing six-figure payments. That is a lot of money. Moving forward, piece rate is going to be used less frequently, because growers are not going to want to face the future liability for doing it wrong. It’s a shame because workers prefer piece rate: It provides them an option to maximize their profits over a shorter period of time.”

Grape grower calls ‘foul’
Lodi grapegrower and CAWG chairman of state government affairs Brad Goehring is especially incensed by the retroactive provisions of the new law, which require employers to adjust worker compensation dating back to July 2012.

“The whole thing is extortion. Picture the street in front of your house: Tomorrow they post a new, lower speed limit and then issue you a ticket for exceeding the new limit before it was posted.”

Goehring said there is no recourse for employers, who must go back to payroll records from 2012. “The California agriculture workforce is largely migrant.” As an employer himself, “It’s common for us to issue W2 tax forms to workers we had at the beginning of the year, and maybe 80% will (be returned), because we don’t have current mailing addresses.”

Checks for recalculated back pay may face the same fate, Goehring fears, and now those funds will go to the state. “The legislators left way too many things unanswered,” he said.

Using a labor contractor may help with the burden, he suggested. “Contact them, because they now share joint liability for compensation issues.”

This law, Goehring said, creates a disincentive to piece-rate compensation. “If piece rate becomes too onerous, farmers aren’t going to do it. With the advent of the new regulations, it’s too cumbersome to comply. I know a lot have stopped doing piece rate.”

On the other hand, the AB1513 fact sheet states the case for the new regulations:

“This legislation provides a means to resolve these issues in a way that should:
1. Reach more piece-rate workers and provide larger and more timely back pay recoveries than could be expected through litigation;
2. Relieve employers of related liability for statutory penalties and damages for past violations; and
3. Clarify compensation requirements going forward in a way that protects the right of piece-rate workers to be fully compensated for rest and recovery periods and other nonproductive time.”

Gregorio Billikopf, for decades a University of California professor (now emeritus and living in his native Chile) and prolific author is also a longtime supporter of piece-rate compensation. In a 2006 article published by UC Berkeley, “Designing an Effective Piece Rate,” he wrote:

“Individual incentive plans offer the clearest link between a worker’s effort and the reward. Probably the best-known individual or small group incentive pay plan is piece rate. Piece rate is more suited to repetitive crew work (e.g., boysenberry picking, vineyard pruning) than to precision planting, fertilizing or irrigating. As the tie between individual work and results is diminished, so is the motivating effect of the incentive on the individual.”

Software solutions
Concerned employers who feel overwhelmed by their new responsibilities may find some relief from their farm-management software providers. One example is a program devised by AgCode Inc. of Glenwood, Minn.

“What’s especially challenging for ag employers is that unlike truck drivers, ag workers may work at three different blocks a day,” AgCode’s Dion Harste told Wines & Vines. Each of these must be multiplied by the workweek and weighted back by the minute including mandated R&R breaks.

“What we do is to calculate hourly rate per employee, per pound/ton. We do the math,” Harste said. Employer staff must audit rates. AgCode’s engine makes the R&R adjustment and takes a weighted average. It can also be queried back to 2012.

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