Court of Appeal Upholds Dismissal of Nisei Farmers League Action

By: Kyle D. Kring

Nisei Farmers League v. California Labor and Workforce Development Agency is a piece-rate compensation case involving AB 1513 which we have been following and reporting on since it was originally filed.

Last Friday, the Court of Appeal upheld the dismissal of the Nisei Farmers League action challenging the constitutional validity of Labor Code section 226.2 (AB 1513) which went into effect on January 1, 2016 and requires separate payment for piece rate workers' rest breaks and non-productive time. The court concluded that Plaintiff, Nisei Farmers League failed to allege an adequate basis for finding the statute to be unconstitutional. As you may recall, Plaintiff Nisei Framers League had generally alleged that the statute was unconstitutionally vague as to the phrases "other nonproductive time" and "actual sums due." The legal standard the Plaintiff needed to prove was quite high. The court noted that "... a statute will be deemed to have a reasonable degree of certainty and thereby overcome a vagueness challenge 'if any reasonable and practical construction can be given its language of if its terms may be made reasonably certain by reference to its legislative history or purpose.'"

The court went into a lengthy discussion of the 2013 Gonzalez and Bluford decisions and generally concluded that in light of these two cases, which represented the law since 2013 which Labor Code 226.2 codified; the two phrases were not unconstitutionally vague. The court refused to depart from the rule of law set forth in the 2013 Gonzalez and Bluford cases. The court stated, "To a significant extent, the crux of the dispute as alleged by plaintiffs is the question of what the pre-2016 law was regarding piece-rate compensation, since an answer to that question would be necessary to determine the actual sums that were due at that former time. The clear answer to that question is that the piece-rate compensation law generally in effect prior to the January 1, 2016, enactment of section 226.2 was Gonzalez and Bluford, at least from the time of the issuance of those decisions in 2013."

As you will recall, AB 1513 also included a "safe harbor" provision allowing employers to opt in and pay piece rate workers retroactively for rest breaks and nonproductive time under the law in exchange for an affirmative defense. A significant number of companies with piece rate employees paid out the safe harbor fees and/or settled potential prior claims. This decision confirmed that the "safe harbor" option is now closed for any employer who did not timely comply with its terms.

A copy of the Nisei Farmers League appellate opinion can be viewed here.

If you have any questions regarding the Nisei Farmers League case and/or your current piece-rate compensation or hourly plus production bonus system compensation plan, please feel free to give us a call. Kyle D. Kring is a Partner of Kring & Chung, LLP. He can be reached at (949) 261-7700 or via email at kkring@kringandchung.com.

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