Piece-Rate Workers and California Law

Some California employers pay their workers by the piece.  In other words, the workers do not get an hourly rate. Rather, they get a certain amount of money per item of whatever it is that they are producing.

While piece-rate compensation is legal in California, it is subject to certain requirements.  These requirements are set forth in Labor Code section 226.2.

Section 226.2 defines the term “other nonproductive time” as “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.”  As explained below, piece-rate workers must be paid separately for their nonproductive time.  Piece-rate workers must also be paid separately for overtime and rest breaks. 

For example, section 226.2(a)(1) explicitly provides that piece-rate employees must be  “compensated for rest and recovery periods and other nonproductive time separate from any piece-rate compensation.”

Furthermore, employers must provide specific information to piece-rate workers in the workers’ itemized wage statements, which are required by Labor Code section 226.  Section 226.2(a)(2) reads as follows:

The itemized statement required by subdivision (a) of Section 226 shall, in addition to the other items specified in that subdivision, separately state the following, to which the provisions of Section 226 shall also be applicable:

(A) The total hours of compensable rest and recovery periods, the rate of compensation, and the gross wages paid for those periods during the pay period.

(B) Except for employers paying compensation for other nonproductive time in accordance with paragraph (7), the total hours of other nonproductive time, as determined under paragraph (5), the rate of compensation, and the gross wages paid for that time during the pay period.

An employer who fails to meet these requirements may be liable for penalties under Labor Code section 226(e) and (via PAGA) under Labor Code section 226.3.

Section 226.2(a)(3) further requires that employers pay piece-rate employees for their rest periods at their regular hourly rate, or the applicable minimum wage, whichever is higher.

Thus, if you are paid by the piece, you should check your wage statements to see if they comply with the law.  You should also be sure that you are being paid separately, and by the hour, for your rest breaks and your nonproductive time.  (You are entitled to one ten minute rest breaks if your shift is between 3.5 and 6 hours long, two such breaks if your shift is between 6.01 and 10 hours long, and three such breaks if your shift is more than 10 hours long.)  If your employer fails to pay you for these breaks, it may also be liable for penalties and liquidated damages that can add up quickly.

Piece-rate workers are also entitled to be paid separately for overtime.  In California, overtime is any work performed over 8 hours in a day, and over 40 hours in a week.  (This is true unless the employee has entered into a valid agreement for the payment of overtime on the basis of each piece produced during overtime hours.  See 29 C.F.R. § 778.418.)

The overtime rate for a piece-rate worker is calculated by determining the worker’s regular rate.  This is done by dividing the total amount earned by the total number of hours worked in a particular week.  Thus, if a piece-rate worker earned $600 in a 60 hour week, her regular rate would be $10 per hour.  The regular rate is then multiplied by .5 to get the overtime rate.  Here, that figure would be $5.  The overtime rate is then multiplied by the number of overtime hours to arrive at the amount that the piece-rate worker must be paid above and beyond her piece rate.  See 29 C.F.R. § 778.111.  The DLSE Manual also has a good discussion of this formula.  See § 49.2.1 (2005 edition).

Piece-rate workers thus have many protections under the California Labor Code.  If you are a piece-rate worker, check to be sure that you are being paid every dollar that you are owed.

The attorneys at Hunter Pyle Law have handled both individual and class action claims on behalf of piece-rate workers.  If you are paid by the piece, and have questions about your paycheck, please feel free to contact us for a free consultation at 510.444.4400, or inquire@hunterpylelaw.com.