AB 1513 California: Piece-Rate Pay, Wage Statements, and Penalties

California’s AB 1513, codified at Labor Code Section 226.2, requires every employer who pays workers on a piece-rate basis to separately pay those workers for rest and recovery periods and for other nonproductive time, at specified minimum rates, and to itemize both on the wage statement. The rules have been in force since 2016, and the penalties for ignoring them stack quickly across a workforce.

Who Piece-Rate Rules Apply To

Piece-rate pay means an employee earns a set amount for each unit completed or task finished rather than a flat hourly wage. An auto technician paid per repair job, a farmworker paid per bin of fruit, or a garment worker paid per finished item are all piece-rate employees. The system shows up most often in automotive repair, agriculture, manufacturing, and transportation.

The problem the statute solves is straightforward. If you only get paid when you finish a unit, what covers the time you spend waiting for parts, sitting in a mandatory meeting, or taking a legally required rest break? California courts, most prominently in Gonzalez v. Downtown LA Motors, held that piece-rate earnings do not cover that time. AB 1513 wrote that principle into a clear statutory framework.¹

The Two Categories of Separately Paid Time

Section 226.2 splits non-piece-rate time into two buckets, each with its own pay rate:

Rest and recovery periods (R&R): the mandatory paid breaks California law already requires, typically 10 minutes per four hours worked.
Other nonproductive time (NPT): any time under the employer’s control that isn’t directly related to the piece-rate activity and isn’t a rest or recovery period. Waiting for materials, attending mandatory meetings, employer-directed cleanup, and traveling between job sites all count.²

Employers cannot fold these periods into piece-rate earnings. Compensation for R&R and NPT must be calculated and paid as separate amounts.³

How to Calculate Rest and Recovery Pay

R&R pay uses the more generous of two rates. For each workweek, the employer must pay the higher of:

The applicable minimum wage. As of January 1, 2026, California’s state minimum wage is $16.90 per hour. A higher local minimum wage controls where one applies.⁴
The average hourly rate, calculated by taking total compensation for the workweek and dividing by total hours worked, after excluding R&R pay, R&R hours, and overtime premiums.²

A worked example. Say a piece-rate employee earns $1,200 in piece-rate pay during a 40-hour workweek and takes two hours of rest breaks. The average hourly rate is $1,200 divided by 38 hours, or roughly $31.58. Since that exceeds $16.90, the R&R pay for the week is calculated at $31.58 per hour for the two hours of breaks — about $63.16 on top of the $1,200.

Employers paying on a semimonthly schedule get a small timing accommodation. They can pay R&R at least at the minimum wage rate during the current pay period and then reconcile any additional amount owed under the average-hourly-rate formula by the next regular payday.²

How to Calculate Nonproductive Time Pay

NPT pay is simpler. The rate must be at least the applicable minimum wage, meaning the highest of the federal, state, or local rate.³ With the federal minimum at $7.25 and California’s at $16.90, the state rate applies in most workplaces unless a city or county sets a higher floor.

NPT can be tracked through actual time records or through the employer’s reasonable estimates for an individual employee or a group of employees.² Reasonable estimates are permitted because tracking every idle minute is impractical in fast-moving piece-rate environments. What counts as “reasonable” is where employers get in trouble. Lowball estimates rarely survive Labor Commissioner review or litigation.

The Base Hourly Rate Shortcut

There is a shortcut written into the statute that many employers miss. If you pay an hourly base wage of at least the applicable minimum wage for every hour worked, in addition to any piece-rate compensation, you are automatically deemed in compliance with the NPT pay requirement, and you don’t have to separately itemize NPT hours on the wage statement.²

This eliminates the recordkeeping headache of tracking or estimating NPT. The R&R rules still apply separately and still have to be calculated and itemized, regardless of whether you use this shortcut.

Wage Statement Requirements

Section 226.2 adds specific line items to the itemized wage statement California already requires under Labor Code 226. For piece-rate employees, the pay stub must separately show:

Rest and recovery periods: total R&R hours, the hourly rate paid, and the gross wages for those periods.
Nonproductive time: total NPT hours, the hourly rate paid, and the gross wages, unless the employer qualifies for the base hourly rate shortcut above.²

These aren’t formatting preferences. The itemization requirements carry the full penalty weight of Labor Code 226. A knowing and intentional failure to provide a compliant wage statement entitles the employee to the greater of actual damages or $50 for the first violation and $100 for each subsequent pay period, up to $4,000 per employee, plus attorney’s fees.⁵

Good Faith Error Protection

The statute provides limited shelter for employers who get the NPT calculation wrong but tried to get it right. If you made a good faith error in determining NPT hours, you still owe the unpaid wages, but you won’t face statutory penalties or liquidated damages based solely on that error. To qualify, you must have actually provided the required NPT itemization on the wage statement and paid at least the minimum wage for the NPT hours you did record.²

This protects errors in estimating the amount of NPT. It does nothing for an employer who fails to pay NPT at all or who never itemizes it.

Overtime Still Applies Separately

Section 226.2 explicitly does not limit or alter overtime requirements.³ California’s overtime rules remain in force for piece-rate employees. Daily overtime after eight hours, double time after twelve hours, and weekly overtime after forty hours must all be calculated and paid on top of piece-rate, R&R, and NPT compensation.

Overtime for piece-rate work is calculated using a regular rate of pay determined by dividing total earnings (piece-rate plus NPT, excluding R&R compensation and overtime premiums) by total hours worked. The overtime premium then applies to hours over the daily or weekly thresholds. This is one of the most common failure points in piece-rate compliance, and the errors compound quickly when employees regularly work more than eight-hour days.

Penalties and PAGA Exposure

The financial exposure stacks in layers:

Unpaid wages: all back pay for every missed R&R and NPT payment, plus interest.
Wage statement penalties: up to $4,000 per employee for failure to properly itemize R&R and NPT.⁵
Minimum wage violation penalties: $100 per underpaid employee per pay period for an initial intentional violation, and $250 per employee per pay period for subsequent violations, plus back wages and liquidated damages.⁶
Civil penalties under Labor Code 558: $50 per underpaid employee per pay period for initial violations and $100 for subsequent violations, plus recovery of underpaid wages.⁷

The real danger is PAGA and class-action exposure. Piece-rate pay structures tend to apply the same way across an entire workforce, so one employee’s complaint can rapidly become a claim covering hundreds of workers and thousands of pay periods. PAGA allows employees to recover civil penalties on behalf of the state for Labor Code violations.⁸

California reformed PAGA in 2024. Employers who move quickly to fix violations and make employees whole after receiving a PAGA notice face capped penalties. Employers whose violations are found to be malicious or fraudulent face higher penalties than before. The reform also increased the share of penalty money going to affected employees from 25% to 35%.⁹ For a piece-rate employer still running a noncompliant pay system, the math has not gotten friendlier.

1
Department of Industrial Relations. New Piece-Rate Legislation (AB 1513) – Fact Sheet
2
California Legislative Information. California Labor Code 226.2
3
Department of Industrial Relations. AB 1513 Piece-Rate Compensation FAQs
4
Department of Industrial Relations. Minimum Wage
5
California Legislative Information. California Labor Code 226
6
California Legislative Information. California Labor Code 1197.1
7
California Legislative Information. California Labor Code 558
8
Labor and Workforce Development Agency. Private Attorneys General Act (PAGA) Frequently Asked Questions
9
Office of Governor Gavin Newsom. Governor Newsom Signs PAGA Reform