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CALIFORNIA PIECE RATE WORKERS -
OVERTIME AND MINIMUM WAGE REQUIREMENTSAn employer can pay their employees on a piece rate basis. This means that the employee is not paid a salary or per time worked, but is paid a set amount for each project that is completed. A common example is auto mechanics that are paid a set amount for a type of repair, regardless of how long it takes them to actually perform the repair. Some employers mistakenly believe that piece rate workers are not exempt from the overtime and minimum wage requirements. Those wage rules, however do apply, and piece rate workers must be appropriately paid.
Minimum Wage Requirements
A minimum wage must be paid for all hours worked during a payroll period. Thus, if work is slow and there are few, if any, piece rate jobs to perform, at a minimum auto mechanics are entitled to be paid a minimum wage for all hours worked.
As an example, assuming a $5 minimum wage, a mechanic working 10 hours during a workweek is entitled to be paid $50 if his or her piece rate wage would be less than $50.
Redoing Piece Work Wage Requirements
A mechanic can be required to redo their work without being paid a second flat rate for the job. However, the time spent redoing the work is calculated in determining the minimum wage threshold.
As an example, assume a $5 minimum wage and a $10 flat rate per job. A mechanic spends one and one-half hours performing a job. Per his piece rate wage he is paid $10, which exceeds the minimum wage rate. However, the work is not done properly so the employee has to spend one additional hour on the project. His total flat rate wage would still be $10. However, the employee is entitled to be paid $12.50 to satisfy the minimum wage floor. ($5 per hour x 2.5 hours)
Overtime Wage Requirements
Auto mechanics are entitled to be paid overtime, even though their regular rate of pay is a flat rate for each assigned job. (Keyes Motors, Inc. v. DLSE (1987) 197 Cal.App.3d 557.) The total flat wage earned during the pay period is calculated. This amount is divided by the total number of hours worked during the pay period, including any overtime. This is the employee's regular rate of pay for the work period. Since the overtime wage is time and one-half, half the regular rate of pay times the number of overtime hours equals the owed overtime pay.
As an example, assume an auto mechanic works 50 hours during a week and earns $1000 in piece rate wages. The regular rate of pay is $20. ($1000 / 50 hours) The additional overtime wage owed is $100. (($20 / 2) x 10 overtime hours)
As another example, combining the overtime and minimum wage requirements, assume a $5 minimum wage and an auto mechanic works 50 hours during a week and earns $200 in piece rate wages. The regular rate of pay is $4. ($200 / 50) The additional overtime wage owed is $20. (($4 / 2) x 10 overtime hours) The total owed pay of $220 is less than the minimum wage of $250 ($5 x 50 hours) so the mechanic is entitled to be paid $250.
SPREADSHEET - CLICK HERE to Download an Excel Spreadsheet that will do the minimum wage and overtime calculations for piece rate workers.