Employees Paid on a “Piece Rate” Basis are Entitled to Overtime Pay
California labor laws are rather specific in regards to how employers should pay employees on a “piece rate” basis; employers are obligated to pay overtime when the employees work over 40 hours in a workweek. A recently filed class action overtime suit illustrates the dangers of making the assumption that overtime is not owed to piece rate workers. The suit, Case No. 6:10-cv-00346, N.D. New York, alleges that Wave Comm, an Arizona-based cable company, failed to pay overtime to its cable installation technicians.
Piece rate or piecework is defined as work paid for according to a set rate per unit. Webster’s Collegiate Dictionary. A piece rate must be based upon an ascertainable figure paid for completing a particular task or making a particular piece of goods. The piece rate earned must equal or exceed the State’s minimum wage rate for all hours worked. (See appropriate IWC Order and Minimum Wage Order and DEPARTMENT OF INDUSTRIAL RELATIONS DIVISION OF LABOR STANDARDS ENFORCEMENTdocument DLSE-2005-W-1 Revised 6/2005)
The technicians were paid a fixed amount of money for different types of installation-related tasks, but did not receive overtime compensation for the numerous weeks in which they worked overtime hours.This is not the first suit such filed by these types of technicians against the cable industry.
Even though paying employees on a piece rate basis is permissible under both the FLSA and state law, employees should be aware not only of their entitlement to be paid overtime, but the specific formula for used to calculate the amount of overtime pay. In general, when an employee is paid solely on a piece rate basis and works overtime hours, the employer determines the employee’s regular rate by dividing the employee’s total weekly earnings by the amount of hours worked in that workweek. The employee is then entitled to one-half of the regular rate for each hour worked above 40, in addition to their regular piece rate compensation.
For instance, if an employee paid on a piece rate basis works 45 hours and earns $360.00 in that workweek, the employee’s regular rate for that workweek would be $8.00 per hour. The employee would then be entitled to an additional $20.00 in overtime (half the regular rate, or $4.00, multiplied by five overtime hours). In that workweek, the employee would receive $380.00 in total compensation.
It is also acceptable to pay piece rate employees one and a half times the piece rate for each “piece” produced during the overtime hours, provided that this is agreed to in advance and that the piece rate exceeds minimum wage and is paid for all hours worked up to 40 in the workweek.
If you believe that you may have received your all amounts you earned as a piece rate employee it is recommended that contact a California Employment Attorney to make sure your rights are protected.