California “Piece Rate” Laws
Most non-exempt employees are paid by the hour for their work. California’s Wage Orders permit non-exempt employees also to be paid on a piece rate basis.
The piece rate system is a system of wage payment in which workers are paid on the basis of the units of output produced. Piece rate system does not consider the time spent by the workers. Piece rate system is the method of compensating workers according to the number of unit produced or job completed. In some industries, piece rate compensation plans are fairly common. For example, mechanics and drivers often are paid by piece rate compensation plans.
Driver Piece Rate Compensation Plans
For example, some truck delivery companies use a formula to pay their drivers. Here are common components of piece rate systems for delivery drivers:
- Tthe number of cases of product delivered on a route,
- The number of miles driven on a route, and
- The number of delivery stops made on a route.
Mechanic Piece Rate Compensation Plans
Many companies pay mechanics under piece rate compensation plans. Under one California company’s piece-rate system, mechanics are paid a flat rate ranging from $17 to $32, depending on the technician's experience, for each “flag hour” a technician accrues. Flag hours are assigned by the company to every task that a technician performs on a car and are intended to correspond to the actual amount of time a mechanic would need to perform the task. A mechanic who completes a repair task accrues the number of flag hours that the company assigns to that task, regardless of how long the mechanic actually took to complete it. Mechanics accrue flag hours only when working on a repair order.
The company calculates its mechanics’ pay for an 80-hour pay period by multiplying flag hours accrued during that pay period by the mechanic's applicable flat rate. For example, a mechanic with a flat rate of $26 who accrued 150 flag hours in a pay period would earn 150 x $26 or $3,900.
How Piece Rate Compensation Systems Are Illegal Under California Law
Under California piece rate compensation laws, your employer must compensate you for all the time you work—not just for piece rate items. For example, truck drivers must be compensated for pre-trips and post-trips. Mechanicsmust be compensated for cleaning up and having to wait at work, waiting for the next car to repair. Or for loaders, while doing paperwork.
Disclaimer: Please understand these discussions and/or examples are not legal advice. All legal situations are different. This testimonial, endorsement and/or discussion does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter, your particular case/ situation and/or this particular case/ situation.