Still Paying Piece Rate?

By Jennifer Jacobus PHRca, SHRM-CP SDEA Director of HR Services.

As an employer in California, we know that California requires all non-exempt employees get paid at least minimum wage for all hours worked. California also has pretty specific requirements for both meal and rest periods for non-exempt workers. There are some industries, however, where it might be more common to pay employees a piece rate wage. As an example only, a mechanic might get paid a flat rate for a transmission overhaul whether it takes the mechanic two hours or four hours, the rate is the same. Employees who are paid piece rate are paid for that specific task regardless of the number of hours it takes them to complete the task. This should not be confused with an exempt salaried employee; a piece rate worker needs to be paid a rate equal to or greater than minimum wage for the hours it took the employee to complete the task, plus overtime if applicable.

In early 2016, AB 1513 required that employees who are paid on a piece rate be separately compensated for rest and recovery breaks at the greater of minimum wage or the average hourly wage for the week. Additionally, piece rate workers must be compensated for “nonproductive time”. Using the example above, a mechanic who is paid the flat rate for the transmission job must be compensated for the time they are waiting (still in control of the employer) for the next auto job. Employers are also reminded that all these different rates, i.e., piece rate, rate for rest periods, a different rate for “nonproductive time” all need to be reported on the employee’s wage statement or check stub.

The recommendation from the employment law attorneys that work closely with SDEA was to reconsider paying employees on a piece rate and consider paying instead, an hourly wage for all hours worked; the liability for the employer is reduced significantly. This recommendation is worth reiterating to employers who are still paying employees a piece rate after a California Federal Court judge granted a preliminary settlement where Safelite agreed to pay $8.2 million to settle a wage claim claiming workers were not paid all wages and breaks.

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