What Is “Piece-Rate” Compensation?

What Is Piece Rate Pay?

California offers several legal ways of paying employees. One of these is “piece-rate” compensation. According to the Division of Labor Standards Enforcement (DLSE), this is defined as “Work paid for according to the number of units turned out.” In essence, this means that a person (or team of people) is paid a pre-defined rate for each unit of work they produce. This may include tasks, like truck drivers getting compensated per mile driven, mechanics working at “book rate”, nurses working per medical procedure, or factory workers working per unit produced.

The California Labor Code on Piece Rate Pay

Unfortunately, this system has resulted in many employers avoiding minimum wage laws and ultimately paying employees less than what they are entitled under the law. The fact that an employer compensates an employee on a piece-rate basis does not end its obligation to the employee.

The California Labor Code also requires that employers compensate employees as follows:

1. In addition to piece-rate compensation, employers are mandated to provide compensation for “rest and recovery periods” as well as “other nonproductive time.” Other nonproductive time means “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.” Rest periods are pre-determined by an employer in accordance with statutes and wage orders, while a recovery period is defined as “a cooldown period afforded an employee to prevent heat illness.”
2. An employee’s itemized wage statement is required to specify the employee’s total hours of compensable rest and recovery time and non-productive time during the pay period, as well as the rate of compensation for each, and the gross wages paid in each category.
3. Nonproductive time must be paid at no less than the minimum wage. Rest and recovery time must be paid at the higher of minimum wage or “average hourly rate determined by dividing the total compensation for the workweek, exclusive of compensation for rest and recovery periods and any premium compensation for overtime, by the total hours worked during the workweek, exclusive of rest and recovery periods.”

Significantly, the labor code does not alter or limit overtime requirements, so any overtime worked by an employee must be paid in compliance with labor laws. In addition, piece-rate and “commissions” are not one in the same, meaning piece-rate compensation rules do not apply to employees who work for commissions.

Contact Sherman Oaks Wage Attorneys at Moss Bollinger

Working on a piece-rate basis should not be an opportunity for your employer to rip you off. If you work piece-rate and your employer is not paying you less than minimum wage for your rest and recovery or nonproductive time, your employer is violating the law. Since 2008, attorneys Ari Moss and Jeremy Bollinger have zealously advocated for the interests of employees against unlawful employer conduct. Call Moss Bollinger to stand up to your employer. We work on a contingency basis, which means we collect no money upfront. Call our office at (310) 982-2291 for a free consultation or reach us online.