“Piece-rate” compensation means an employee is paid based on the amount of “pieces” they complete rather than the hours worked. For example, suppose an employee is paid by the number of pipes they install, and how long each job takes is not accounted for.
Although California Labor Code allows employers to pay piece-rate compensation, it can result in employees being paid below minimum wage. As a result, employers are required to divide their total piece-rate compensation for the workweek by the number of hours worked to ensure that piece-rate employees are earning at least the minimum wage. If an employee’s piece-rate compensation divided by the hours worked results in a figure less than the state’s minimum wage requirement, the employer must make up the difference. Therefore, employees’ work hours must be tracked closely and accurately to ensure compliance with the law.
Another potential issue is if an employer does not take into account nonproductive time, such as rest breaks, meetings, work-related travel, and training. Under California law, rest and recovery periods and compensation for other nonproductive time must be compensated at no less than minimum wage.
Lastly, employers must pay piece-rate employees an overtime rate for any hours worked in excess of 40 hours per week. There are two methods an employer can use to determine overtime pay:
The requirements for fair piece-rate compensation are complicated. Therefore, failing to provide proper piece-rate compensation to employees is a common wage and hour violation. If you have any doubt as to your employer’s compliance with federal and state wage laws, speak to an Orange County wage & hour attorney as soon as possible. They can evaluate your situation and determine if you have a case. If your employer is violating the law, you may be entitled to recover compensation for your unpaid wages and overtime, as well as interest payments on the amount you are owed and legal fees.
Some of the most common industries to pay through a piece-rate system are as follows:
If you are a piece-rate employee and believe you are not receiving fair compensation, speak to an Orange County employment attorney today.