What is Piece Rate Compensation?

As of this calendar year, piece rate compensation has become a hot topic in California.

Last year, California Gov. Jerry Brown signed Assembly Bill 1513 into law, and since the law went into effect on the first day of this year, employers who were paying employees on a piece-rate basis must now change how they do so.

What is Piece Rate Compensation?

Piece rate compensation
is paid given to employees who perform “piece work” (or “piecework”), which refers to being paid a fixed rate for each job action that is performed or each unit that is produced as part of an employee’s job.

Many different types of employees are paid for piecework, such as factory workers employed in a manufacturing facility, construction workers, massage therapists, pet grooming professionals, personal trainers, hairstylists, truck drivers and in-store employees who work on sales commission, among many others.

Provisions Under AB 1513

Employees who are paid for piecework and those who are commission-paid must now receive at least the California minimum wage, currently set at $10 per hour, for all time that is spent performing job-related tasks that have not been specifically included in the piece rate compensation.

Employers therefore are now required to pay employees previously paid on a by-the-piece basis for any rest and recovery periods as well as other “nonproductive time.”

As defined by law, this nonproductive time includes time outside of rest and recovery periods that is under the employer’s control that is not directly related to the activity receiving piece rate compensation.

California Compensation for Rest and Recovery Periods

California employers are required to pay their employees separately for time that employees spend at rest and recovery periods. This compensation rate is an hourly rate that is defined as being no less than the higher of either of the following two pay rates:

• “An 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”
• The minimum wage rate that is applicable to all other employees, and is calculated as the highest rate of the following three minimum wage standards, federal minimum wage, state minimum wage or local minimum wage. For most employees in California, this would be a minimum of $10 an hour.

California Compensation for Other Nonproductive Time

Employees must be paid for other nonproductive time spent under the control of the employer, and must be compensated in an amount that is at least the applicable minimum wage.

The time spent in such activities can be determined by employee records or can be determined by a reasonable estimate of the employer for each applicable pay period.

Keeping Track of Additional Pay

Employers are now required to issue itemized statements to employees compensated on a piece-rate basis. These statements must include the total hours of compensable rest and recovery periods as well as the employee’s rate of compensation. The same must also be itemized for the nonproductive time spent during the job.

Next Steps for Employees Who Are Not Being Compensated Properly in California

If you are an employee who works as an inside sales person or if you have been paid by the piece and feel that you have not been fairly compensated for all of your time worked under the new California law, you may be entitled to receive additional pay.

An attorney can review your case at no charge and can help you decide the next steps to assist you in reaching fair compensation under the law.

Join a Free California Sales & Piece Rate Worker Class Action Lawsuit Investigation

If you are a California employee who receives commission pay or gets paid on a piece-rate basis, but you have been denied additional minimum wage pay, your employment rights may have been violated.

Get a Free Case Evaluation Now