The more things change the more they stay the same - California Wage Law - Piece rate
I've been doing California piece rate cases for a long time. In this article, I get down into the details on California piece rate law. Perhaps, I should start at the beginning. Paying workers by piece rate is not illegal under California law. Where most employers have screwed up with their piece rate pay structures is that they make two critical mistakes. First, they don't separately pay for all hours worked. Second, they don't provided a paid 10 minute rest breaks.
California Labor Code Section 226.2 - the California piece rate Labor Code Section
For years, I had to win these piece rat cases with case law. That all changed when California Labor Code Section 226.2 was passed. I was the only Class Action wage lawyer to testify at the California Legislature Hearing for Labor Code Section 226.2. This was literally a "game-changer" in some respects. In other respects 226.2 merely codified (read: stated) what the courts had been saying for years. Unlike many were claiming at the time - California law didn't change with the Gonzalez v. Downtown LA Motors case. But what 226.2 did was end all of the cheesy B.S. arguments employers made when they were caught red-handed taking workers wages by using illegal piece rate pay structures.
Bill Turley testifying at the California State Senate Hearing on California Labor Code Section 226.2
Bill Turley was the only wage class action lawyer asked to testify at the California legislature Hearings on California Labor Code Section 226.2
- California's piece rate Labor Code Section
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This is why Bill Turley is continually asked to go to Sacramento in order to work on wage theft issues with the California State Assembly, California State Senate, the State of California Labor Commissioner’s Office, and the California Attorney General’s office. Bill is known for telling it like it is. They know he will tell it the way it is.
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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.
Examples of piece rate pay structures
Mechanics that get paid by the job
Mechanics that are paid on a flag rate system or a book rate system
Drivers that are paid by the miles they drive
Garment workers that are paid by each garment that they sew/ produce
Field workers that are paid by the bushel of fruit that they pick
Transcribers that paid for each document that they transcribe
Loaders that are paid by each package or box that they load or paid the weight of what they load
Construction workers that are paid by each unit that they build or construct - for example for each solar unit they install
House keepers that are paid for each room that they clean
Call center workers that are paid for each call they take
Armenta- utility workers weren’t paid for the time spent driving to job sites and doing paper work - the court held that Califoria doesn’t use the federal approach of averaging hours worked
Armenta v. Osmose, Inc. 135 Cal.App.4th 314, 324 (2005).
Accordingly, under Armenta, when using an hourly based compensation system, an employer is required to pay at least the minimum wage for each hour worked and may not meet that requirement by showing that the employee was effectively paid more than the minimum wage for all time on the job by dividing the amount of the employee's total compensation for the pay period by the total hours worked, even though some time was not separately compensated by an hourly wage.
The irony of the Armenta case
The Armenta case is cited in every California piece rate case that I can recall. However, the Armenta case was not a piece rate case. Instead, the workers in Armenta were paid on a hourly basis. But the important part is that the workers were not getting paid for all time worked.
What makes this all worthwhile - when employees receive their checks for unpaid wages!
Clients that are happy they got their check in a California Wage Case
It feels really good when you get your check for unpaid wages owed to you!
Mechanics paid on flat rate - per flag hour must be paid for all time worked (Gonzalez vs Downtown LA Motors)
Piece rate and rest periods
Armenta's holding also has been extended to the issue of whether an employer paying on a piece-rate basis must separately compensate employees for rest periods. In Bluford, truck drivers were compensated based on the number of miles driven and other variables, but “none of these components directly compensated for rest periods.” Bluford v. Safeway Inc. (2013) 216 Cal.App.4th 864, 872.
The court in Bluford held that “under the rule of Armenta … rest periods must be separately compensated in a piece-rate system. … [¶] Thus, … a piece-rate compensation formula that does not compensate separately for rest periods does not comply with California minimum wage law.” Bluford v. Safeway Inc. (2013) 216 Cal.App.4th 864, 872.
Meaning, that when you have a piece rate system, you must also provide separate paid 10 minute rest breaks.
Labor Code Section 226.2
Effective January 1, 2016, the California Legislature enacted Labor Code section 226.2, which codified the holdings of Gonzalez and Bluford, providing for separate payment for nonproductive work time and for rest periods when employees are compensated on a piece-rate basis.
Section 226.2 mandates that piece-rate employees receive compensation for all rest/NP time that is “separate from any piece-rate compensation.” California Labor Code Section 226.2(a)(1). Such employees are assured under an alternative formula in subdivision (a) that their compensation for rest and recovery time will be no less than minimum wage; in some instances the compensation may be greater than minimum wage. California Labor Code Section 226.2(a)(3)(A) and (B).
And an employer must compensate its piece-rate employees for nonproductive time at no less than the applicable minimum wage. California Labor Code Section 226.2(a)(4).
I know California Labor Code Section 226.2 very well, because I testified on the bill in the California Legislature.
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:
- The 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.
It is my understanding that I represent more Teamsters and drivers than any lawyer in California. Many of these driver class action cases have been based upon trucking companies not separately paying drivers for all time worked and for not providing paid rest breaks.
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. Mechanics must be compensated for cleaning up and having to wait at work, waiting for the next car to repair. Or for loaders, while doing paperwork.
Your next step
If you suspect (or know) that you haven't been paid all of the wages that you are owed, you need to immediately contact a seasoned California wage lawyer about your unpaid wages.
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