How to pay meal and rest break premiums to commissioned and piece rate employees
Jasmin B. Bhandari
In 2021, we reported that the California Supreme Court held that employers must pay meal and rest break premiums (for missed or noncompliant breaks) at the regular rate. This is simple to calculate for an employee earning a standard hourly rate for every hour worked. However, the appropriate calculation is more complex for employees who earn commissions, piece rate (flag or flat rate pay), or other nondiscretionary compensation.
Labor Code section 204.1 further allows dealerships to pay commissioned employees their commissions once a month. Accordingly, many dealers are unable to calculate the proper regular rate until month end, when commissions have been calculated. So what can dealers who pay monthly commissions do? We recommend paying meal and rest break premiums at the base hourly rate for premiums accrued in the first pay period and then “trueing up” this calculation at the end of the month. Accordingly, the month end paycheck would include not only the regular rate payment for premiums accrued in the second pay period but also for an additional sum (in excess of the base hourly rate) for premiums accrued in the first pay period, in order to ensure the premium is paid at the regular rate, as required.
Contact experienced counsel to discuss this calculation and ensure compliance.