Piece Rate Pay

Piece Rate Pay

Piece rate pay can be a fantastic way for both employers and employees to structure an employee’s pay.  It allows the employer to provide an incentive for employees who work hard. It also helps maximize production and allows an employee to tailor their earnings based on how hard and/or efficient they work. However, sometimes employers get carried away and take advantage of employees under a piece rate system.

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How is piece rate calculated?

Piece rate is most common in the agriculture, transportation, and installation industries. It should be calculated based on the completion of an easily measured unit. For example, it can be measured by the number of bags of produced picked, the number of miles driven, or the number of units installed. However, employers are not allowed to pass along business risks to the employees. One common mistake is not giving credit to an employee for work performed when the customer/client doesn’t pay.  If you think your employer is taking credits for business risks or business losses against your piece rate work, please contact one of the labor attorneys at Eason & Tambornini for a free consultation.

Does a piece rate employee also get paid by the hour? How do you calculate waiting time as a piece rate employee?

Piece rate work is based on the premise of there being plenty of work for the employee to perform. If an employee is faced with down time and required to wait for the next available job, the employer must pay that employee for their downtime. The down and/or waiting time is also called non-productive time. Likewise, if an employer has an employee perform services beyond their calculated piece rate pay, the employee must get paid for the extra time.

Does an employee get paid for rest time when they work on a piece rate basis?

Under California law, an employer is required to pay all employees, including those working on a piece rate basis, for rest time. The employer must pay an employee for all non-productive time. The rate at which they are paid is often subject to dispute, but should never be less than minimum wage.

Piece Rate Wage Statements

The piece rate wage statement is more complex than a traditional wage statement. In addition to showing how the piece rate portion of their pay is calculated, the statement must show the total hours of entitled rest periods and the rate of pay for those rest periods.

There is nothing inherently wrong with being paid on a piece rate basis. If done correctly, it can be a great alternative for both the employer and the employee. It provides an incentive for hard work and efficiency and allows for compensation adjustments.  However, employers who try to hide business expenses and the risks of business losses in the piece rate system are likely doing so illegally. Employees must be compensated for unproductive time including time waiting for a new project, time in traffic, and rest breaks. If you have questions about piece rate pay, or your employer’s piece rate compensation plan, please do not hesitate to contact one of the attorneys at Eason & Tambornini.

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