Piece Rate Payment Requirement

If you are an employee who earns compensation based on a “piece rate” you may think that your employer does not have to adhere to overtime and minimum wage requirements, but this is not true. Even piece rate employees have certain rights that employers cannot ignore.

What is Piece Rate Compensation?

Piece Rate compensation means that an employee is paid not based on hours work, but for completing a certain “piece” of work. For example, an agricultural worker might be paid per acre cleared. This is piece rate compensation, because the worker is paid not based on hours, but on how much work he completes, in this case, acres cleared.

Piece Rate Requirements

State and Federal employment laws apply to piece rate employees, providing certain protections.

The Fair Labor Standards Act (“FLSA”), the federal law that governs wages and compensation, requires piece rate compensation (when multiplied) to equal at least the minimum wage. In practice, this means that, by the end of a given workweek, a piece rate employee must have received the equivalent of the prevailing minimum wage, which in California is higher than the federal rate. If a piece rate employee’s weekly earnings are less than the hourly minimum wage, the employer must pay the balance to ensure that the employee’s total compensation equals the minimum wage.

FLSA also requires piece rate employees to receive overtime. This means that a piece rate employee who works an excess of 40 hours per week, must receive overtime pay. For a piece rate employee, the overtime rate requires the employer to divide the employee’s earnings for the week by the hours worked; this total is the employee’s regular rate of pay for that week. The employer then uses this pay rate to determine overtime for the week. Or the employer and employee may also agree to use a simpler method. The simple method allows the employer to pay the employee one and a half times the employee’s piece rate for each piece completed after 40 hours. Both methods still require the employer to pay minimum wage in addition to overtime.

California law is largely similar to federal law, with some exceptions.

Complications Abound

The requirements for proper piece-rate compensation are complicated and some employers, either willingly or inadvertently, fail to provide proper piece rate compensation. Yet other employees miscategorize altogether, improperly labeling employees who should be piece rate in the wrong category. A knowledgeable labor and employment lawyer can help navigate these categories and rules.

A California Wage and Employment Attorney Can Help

If you are compensated on a piece rate basis and believe that your employer has not provided the minimum wage or overtime, there is relief. The Orange County, Los Angeles, and Riverside attorneys practicing at Nassiri Law Group, can help you secure the overtime or wages that you have earned. Call today for a free case consultation at 714-937-2020.