California law requires employers to pay nonexempt employees at least minimum wage for all hours worked, but employers can run afoul of this requirement when they pay their employees pursuant to “activity-based” compensation systems. In this type of wage structure, employees’ hourly rates are based on labor that results in direct charges to customers. Because time spent on “non-productive” tasks — such as cleaning, waiting for customers, traveling or taking rest breaks — doesn’t generate those charges, courts have found that employers must separately compensate employees for that time.
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