Q: I WORK for a company that pays us on a piece-rate basis for every task that we finish. A task may take several hours to complete. If we do not complete it by the end of the shift, we are not paid for that task, regardless of the time we already spent working to complete it. On most days, though I worked at least 12 to 14 hours, I may get paid $100. This doesn’t seem fair after all my hard work. What are my rights?
A: If you worked 12 to 14 hours for the day and was paid only $100, you may be entitled to additional wages, regardless of whether you are paid hourly or per piece.
A piece rate or piece work is a fixed sum paid for each completed task, procedure or piece of work. Employers may legally pay employees on a piece-rate basis rather than on an hourly rate.
However, piece-rate workers should receive no less than the minimum wage. This means they must be paid at least the minimum wage for all hours worked. If pieceworkers spend time doing other work-related activity, such as pick-up or clean-up activities, attending compulsory work meetings, travelling under employer’s control, or being required to wait, these are considered hours worked. If they are precluded, by these activities, from earning their piece rate compensation, they must be paid at least the minimum wage (or an agreed hourly rate) for that period.
When a piece-rate or incentive plan is implemented, the piece rates or an explanation of the incentive plan, must be recorded and provided to employees. Employers must retain accurate records of the number of piece-rate units earned by each employee and any applicable piece rate paid to the employee. This means the piece-rate scheme must be clearly outlined in the employees’ paystubs.
Piece-rate employees, like hourly employees, are also entitled to overtime pay if they worked more than 8 hours per day or more than 40 hours per week. The overtime premium is based on the employee’s “regular rate” which is computed according to specific methods provided by law.
If employees work overtime hours but are paid only on a piece rate basis, a question might arise as to whether the employer is using the piece rate method to avoid paying the correct wages to its employees. This was one of the claims that employees made against employer, Schneider Logistics, Inc., a company that provides warehouse workers for large retailer, Walmart, in a distribution center in Riverside, California.
According to reports, the employees were switched from hourly pay to a piece rate plan, where they were paid for the number of truck containers that they loaded or unloaded. However, even though employees worked to load or unload a container, if that container is not completely filled or unloaded by the end of the shift, the employee will not be paid at all for that task.
Employees said they were told that they would earn “much more money” under the piece rate plan. But it was not clearly explained to them exactly how the piece rate plan worked. The plan was apparently so confusing that even some attorneys had difficulty understanding it.
The piece-rate system adopted by the employer was eventually found to be illegal and was then changed. However, since the employees worked double shifts of 16-hour days, 7 days a week without being provided mandated breaks, they had additional claims for unpaid wages and missed breaks.
Rather than continue to litigate, the parties agreed to settle the case for $21 million. About 1,800 warehouse employees will potentially recover the unpaid wages, interests, and penalties that they are owed by the employer under the law.
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C. Joe Sayas, Jr., Esq. is trial attorney who has obtained several million dollar recoveries for his clients against employers and insurance companies. He has been selected as a Super Lawyer by the Los Angeles Magazine, featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements, and is a member of the Million Dollar-Advocates Forum.