Employees Paid On A Piece Rate Compensation Plan Are Still Entitled to Minimum Wages for Non-Piece Rate Activities

Written by Galen T. Shimoda and Justin P. Rodriguez

While many California employees are paid a familiar hourly wage or salary as compensation for their hard work, some are paid what is called "piece rate" compensation. Piece rate pay systems usually occur in construction, maintenance, or repair related industries. The basic premise is that an employer identifies a specific item (or unit) of work and attaches a specific amount of money for each item (or unit) completed or produced. Examples of this could range from being paid per foot of flooring installed in a home, HVAC units repaired in a day, bushels of oranges picked, miles driven as a truck driver, or number of cars repaired, etc. The California Wage Orders specifically authorize this less common and complex pay practice.

However, employees should be careful when working under a piece rate system. Simply because an employer can choose which items (or units) it wishes to compensate employees for, does not mean that they avoid paying employees for time spent on tasks that do not earn additional "pieces." A common example of this "non-productive" time would be where an employee paid under a piece rate system is required to attend meetings. The recent wage and hour class action case of Gonzalez v. Downtown LA Motors, LP, underscores this point. The employees in Gonzales were auto service technicians who were paid based on the number of repair tasks completed. Although the technicians' pay averaged out to more than the minimum wage on a per hour basis, they regularly were unable to earn additional pieces because there were not enough vehicles to service and had to remain on the premises waiting for vehicles to come in. The technicians were also expected to perform various tasks that did not earn any additional pieces (e.g. attend meetings, clean work stations, travel to pick up and return cars, etc.).

The Court expressly recognized that the California Wage Orders and Labor Code provisions prohibit averaging an employee's pay over a day or pay period in determining whether an employer has satisfied its obligation to pay minimum wages. Its premise was simple. An employer who has control over employees and directs them to perform tasks that do not earn additional pieces cannot avoid its obligation to make sure that this time is still compensated as hours worked. The default minimum wage protections in California ensure that an employer cannot take advantage of employees this way. If it were otherwise, an employer would be able to manipulate its employees by having them perform "unproductive" tasks at its leisure for hours, if not days, at a time without paying them for it. That is contrary to basic notions of fairness as well as California law.

If you believe you have claims for unpaid wages on an individual or class wide basis, contact our office to have your claims evaluated.

The Shimoda Law Corp. legal articles should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents of these articles are intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.

Back to Articles