Piece rate employees are traditionally paid by the amount of work they accomplish, rather than on an hourly or salary basis. This system was initially designed to incentivize workers to be more productive, as they are rewarded for the number of pieces of a product produced, or services provided, in a given period. For example, the worker who could build 10 pieces of a furniture part in a given day would make more than a worker who only built 8 in the same time period.
Some of the most common professions to be paid in a piece-rate system of compensation include automotive mechanics, furniture makers, installers and truck drivers. For example, an auto mechanic may be paid in “flag hours” for repairs, while a truck driver will be paid by the mile, and a furniture maker will be paid based on the number of pieces constructed.
Though not every worker in California may be paid this way, there are thousands of employees across the state who are– and thousands who are not being compensated properly. New state labor laws are cracking down on employers who do not account for all the time that one spends on the job site.
In 2013, a California Court of Appeal confirmed that in addition to all piece rate wages earned, piece rate workers must also be separately paid an hourly rate of no less than minimum wage when they are waiting for work or performing work that does not earn piece rate wages. For example, an auto mechanic must be separately paid minimum wages when waiting for cars to service, cleaning the shop, attending meetings, etc. A truck driver must be separately paid minimum wages basically whenever the wheels stop rolling (truck maintenance/fill-ups, loading/unloading, stopping for bad weather, etc). An installer must be separately paid minimum wages whenever he/she is not installing the item or performing the service (i.e., travel, training, meetings, etc).
The court cited a subdivision of a California wage order, which reads:
“Every employer shall pay to each employee, on the established payday for the period involved, not less than the applicable minimum wage for all hours worked in the payroll period, whether the remuneration is measured by time, piece, commission, or otherwise.”
The court confirmed that “hours worked” means “…the time during which an employee is subject to the control of an employer.”
Essentially, any time a worker is required to be at work, they must be separately paid the minimum wages, whether they are earning piece rate wages or not.
Many employers mistakenly believe that they can average all wages earned over the pay period to determine if the worker earned minimum wage on average. This is not correct or legal under California law. Rather, a company must compensate workers with an hourly rate for all time that is spent on the clock performing non-piece rate duties, even if that “averages out” to greater than minimum wage.
In addition, employers must provide a paid rest period for all piece-rate workers, and these breaks must be paid via an hourly rate. Under the traditional piece rate method, a worker who stops making pieces to take a rest break would thus receive an unpaid rest break since no pieces were made while on break. This is not legal, as rest breaks must be separately paid an hourly rate of no less than minimum wage. Payment for such tasks and rest breaks may not be “included” in the piece rate pay. They must be clearly documented on an employee’s pay stub as a separate hourly wage.
In a separate 2013 case, the court found that:
“…a piece-rate compensation formula that does not compensate separately for rest periods does not comply with California minimum wage law.”
Many employers are either not aware or not complying with these rules, and thus have been violating this system.
As we already mentioned, some of the most common industries to pay through a piece-rate system include the automotive and trucking fields, but the same rules apply to all piece rate workers in California. There are several other professions who may be paid in piece-rate, such as:
If you have been working on a piece-rate or commission system of pay in California, you may be owed back-wages. Lauby, Mankin & Lauby LLP for a no-cost consultation and our lawyers will fight for your legal rights as an employee. You can reach us online or call our toll free phone number at 888-959-8508.
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