Paid Rest Periods for Piece-rate Workers Unanswered Questions PHASE 1 – Agricultural DISCLAIMER: These answers are proposed DRAFT responses, formulated by L&I after reading all of the responses submitted by policy process participants. These draft responses may still be changed after further discussion and review. All responses below are specific to agricultural workers who are exempt from the overtime provisions of the minimum wage act. Answers are based from Demetrio v. Sakuma Brothers Farms, Inc., 183 Wn.2d 649, 355 P.3d 649 (2015); chapter 49.30 RCW; chapter 49.46 RCW; chapter 296-131 WAC; Administrative Policy ES.A.8.1 Administrative Policy ES.A. 8.2; and additional explanations of bonuses found at 29 CFR §§ 778.208, 778.211, 778.502. A. “Separate Agreement” for paid rest periods 1. The Supreme Court held that separate pay must be based on the higher of the regular rate of pay or minimum wage unless there was an agreement between the parties to pay a different rate for the rest break time. The Court gave the example of agreeing to pay more, but could the worker and employer agree to a lower amount for rest breaks so long as it isn’t below minimum wage? No, separate pay for rest periods must equal at least the applicable minimum wage or the piece-rate worker’s regular rate of pay, whichever is greater. Any voluntary agreement between the employer and employee must be equal to or at a higher rate than the piece-rate worker’s regular rate of pay. The Supreme Court decision (pg. 15 of the slip opinion) states, in part, “[i]f rest breaks are compensated at a lower wage than the pieceworker’s regular rate, there is a strong incentive to miss rest breaks.” Demetrio, 183 Wn.2d at 658. And in the footnote 5 on page 16, the Court clarified its reasoning: “[f]or example, it is conceivable that an employer and employee could agree to rest break pay at a higher rate than the employee’s regular rate.” Id. at 663 n.5. Paying a worker a lower rate for rest periods than for active work hours would frustrate the purpose of WAC 296-131-020(2) and discourage piece-rate workers from taking their breaks. 2. Did the Court leave open the ability for an employer and employees to contract for a separate rate for rest breaks? See the second sentence of the conclusion on p. 16 “…in the absence of a separate agreement…” and footnote 2 on p. 12 of the ruling. Certainly, absent a contract, rest breaks must be paid at the higher of the minimum wage or regular rate. Is it allowed for an employer and employee to agree by contract on a separate rest break pay structure that is higher or lower than the regular rate (but not lower than minimum wage)? The Court recognized that paid rest periods could be subject to voluntary bargaining between an employer and employee within the scope of the law. As such, any agreement of this nature must provide separate rate break pay equal to or at a higher rate than the employee’s regular rate of pay. (See answer A-1, above). The only paid rest period agreements that fulfill the purpose of WAC 296-131-020(2) are those agreements that contract to pay rest periods at a higher rate than the worker’s regular rate of pay. 2-2-2016
Paid Rest Periods for Piece-rate Workers Unanswered Questions
3. Can a worker sign an agreement stating that he understands that the bonus pay includes rest breaks, and that there will be no separately calculated rest breaks? No, if a promise to pay “bonus pay” is part of the worker’s contract of employment, it would be a “non-discretionary” bonus and must be included as part of the piece-rate worker’s regular rate of pay and in the calculation for separate paid rest periods. (See definition of discretionary v. non-discretionary bonuses in Section B).
B. Multiple rates of pay (bonuses) To answer questions related to bonuses, we must first define “discretionary” and “nondiscretionary” bonuses. A “discretionary” bonus, gift, or payment in the nature of a gift given on special occasions need not be included in the regular rate of pay. Such