Piece rate employees are paid by the amount of work they accomplish, rather than on an hourly basis. This compensation structure aims to incentivize workers to be more productive than employees paid by the hour. But piece rate compensation structures often violate California’s employment laws. For example, piece rate workers are denied overtime pay, yet they are entitled it if they work overtime hours. They are also entitled to rest breaks and recovery periods, and they must be compensated for such periods. If something seems strange with your piece rate pay, call a lawyer for a free consultation.
Piece rate compensation structures are extremely common across Orange County and California. For example, a truck driver will be paid for each mile drive, a mechanic may be paid in “flag hours” for repairs, a roofer may be paid per “square” produced, and a carpenter may be paid based on the number of pieces constructed.
Piece Rate Compensation Legal Requirements
There are several ways in which employers violate CA law with respect to piece-rate compensation. Generally, employees under a piece rate system must still be paid:
Over-time pay at the regular rate of pay
Overtime pay is required by Labor Code § 510. While California’s piece-rate laws have evolved dramatically in the last three years, the law has always been clear regarding overtime. But you might be wondering, if you’re not being paid by the hour, how do you accrue overtime? Well, its based on the time you spent working. California’s law is clear that any time that you are subject to the control of the employer you are “on the clock” for purposes of overtime whether you are punching in and out of an actual time clock at work. Therefore, if you work for 11 hours on Monday, you should get paid 3 hours of overtime. OK, but how is OT calculated in a piece-rate system? It’s calculated based on the employees “regular rate of pay.” The best way to figure out your regular rate of pay is to call an employment lawyer for a free consultation.
Separate compensation for rest breaks and recovery periods
The law requires employer utilizing a piece rate system to separately compensate the employee for rest and recovery periods. This separate compensation must be the higher of either: (1) an average hourly rate based on a statutory formula, or (2) the applicable minimum wage.
The “average hourly rate formula” is calculated by dividing the total compensation for the workweek excluding compensation for rest periods, recovery periods, or overtime compensation by the total hours worked during the workweek excluding time for rest and recovery periods.
Separate compensation for non-productive time
California just passed a new law for piece rate workers that, in addition to rest and recovery time, requires piece-rate employees be paid separately for other non-productive time. Non-productive time is time under the employers control that is not directly related to the activity being compensated on a piece-rate basis. This generally means time spent attending meetings, waiting for work, standby time, and time spent conducting pre and post inspections. Time spent doing “other non-productive” activities must be compensated at an hourly rate that is no less than the applicable minimum wage.
Averaging pay is illegal
California case law just confirmed that in addition to all piece rate wages earned, piece rate workers must also be separately paid an hourly rate when they are waiting for work or performing work that does not earn piece rate wages. An employer can not get around this by making you wait to begin work. According to CA law, “hours worked” means the time during which an employee is subject to the control of the employer.
Employees must be given proper notice and pay stub information consistent with the actual piece rate compensation plan
There are detailed documentation requirements in CA Labor Code § 226 for all employees, including piece rate employees. But there was a new law recently passed that requires wage statements issued to piece-rate employees separately list the total hours of compensable rest and recovery periods, the rate of pay, and the gross wages paid for the rest and recovery periods during each pay period. It must also list the total hours of non-productive time, the rate of compensation for non-productive time, and the gross wages for “other non-productive time.”
Orange County Lawyer for Employees Paid a Piece Rate
The California legislature recently passed AB 1513. The new law, to be codified in Labor Code section 226.2, will take effect on January 1, 2016. Piece rate employees in Orange County and throughout California should take note of what their rights. If your employer is violating the piece rate laws in some way, you should call our Orange County employment office for a free consultation.