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What is Piece-Rate Pay in California?

Piece-rate pay means that a worker is paid based on the amount of work they complete instead of at a set salary or hourly wage. Employers might use this system to encourage greater productivity in a shorter period of time from workers, but there are many legal issues to consider regarding piece-rate pay. 

If you are a California employee who receives piece-rate pay and you have concerns about whether your employer violated the law and your rights, speak with a California minimum wage lawyer as soon as possible. 

How Does Piece-Rate Pay Work?

When you receive piece-rate pay, you get compensated for every service you provide or product you produce on the job. This means your pay can vary as productivity or opportunity varies. Ability also plays a role, as someone who can complete the production of 12 chairs in a day at a furniture factory will earn more than someone who can only complete nine chairs.

Some common industries that use piece-rate pay include:

  1. Vehicle mechanics
  2. Commercial truck drivers
  3. Factory workers and manufacturing
  4. Installers and repair work
  5. Pet groomers
  6. Salon workers

A truck driver might get paid for every mile they drive or every delivery they complete. A cable installer might only be paid for the number of installations they conduct on a given day.

No More Piece-Rate Pay for California Garment Workers

As of January 1, 2022, a new law went into effect, making California the first state to prohibit companies from paying garment workers on a piece-rate basis. Instead, garment manufacturers must compensate workers hourly, and they must receive at least the applicable hourly minimum wage for all time worked.

If a garment manufacturer pays a worker by a piece rate, the company can face up to $200 in fines per employee for each pay period the employer uses a piece-rate system. Liability for violations can also extend to contractors, brand guarantors, and others involved in the garment manufacturing process.

Companies in the garment industry should retain all work orders, contracts, pay statements, and other records for at least four years to demonstrate they are not compensating workers by a piece rate. If any garment worker still receives a piece rate for work in 2022, they should speak with a wage law firm as soon as possible.

Compliance Risks of Piece-Rate Pay

The piece-rate pay system can be beneficial for both workers and employers, but there are also risks of wage violations by companies regarding piece-rate pay. The law has adapted over the past decade to add more protections for workers who receive piece-rate pay.

Compensation for Wait Time

In some industries, there is not always steady work to fill every hour of the day. A mechanic might spend time cleaning up the ship while waiting for another vehicle or part to arrive. A truck driver must fill up the truck, perform inspections, and complete other tasks when they aren’t actively racking up mileage.

The California Court of Appeal has held that workers must receive at least minimum wage for all time they spend waiting for the opportunity to work or engaging in tasks besides their piece-rate duties. Employees will receive:

  1. Piece-rate pay for all productive time spent on usual tasks
  2. Minimum wage (or a higher hourly rate) for all non-productive time the employee is at work

If you work as a dog groomer and groom 10 dogs in a workday, you can receive your piece-rate pay for each dog. However, if you waited 2.5 hours during the day with no clients but were required to be at work, you should receive 2.5 hours worth of an hourly wage. Anytime an employee must be reported to work, they must receive either a piece-rate wage or minimum wage at least.

No Averages for Minimum Wage

Some employers try to take all the piece-rate wages an employee receives over a day and divide it by the number of hours they worked. If the average equals at least the minimum wage in the area, the employer might believe this is enough. However, California wage laws prevent this practice.

Instead, an employer must separate out hours dedicated to piece-rate work and hours spent completing other work or waiting for work. An employee must receive at least the minimum wage for all non-piece rate hours on the job, no matter how much their piece-rate compensation totals for the day.

Compensation for Break Times

California law requires employers to provide paid rest breaks for most employees, and this does not change because an employee receives piece-rate pay. If a piece-rate worker takes a break, they – by nature – are not being paid for that time because they are not being productive during a rest break.

To address this, the law requires employers to pay at least the minimum wage for rest breaks. An employer cannot build compensation for breaks into the piece-rate wages, and the compensation for rest breaks must be clearly set apart and documented on all pay statements.

Piece-rate Employer Violations

While piece-rate compensation systems are used in many industries in California, complying with all wage laws with this system is complicated. Some employers do not fully understand the requirements, and they might violate wage laws as a result. Other employers assume that workers do not know their own rights, so they intentionally fail to comply with all wage requirements.

No matter what the reason for the violation might be, employers must be held accountable for wage violations – including those regarding piece-rate compensation. If you think your employer is not following the rules, you should have your situation evaluated by an experienced California employment lawyer. The right law firm can help you bring the matter before the Labor Commissioner to receive unpaid wages.

Speak with a California Minimum Wage Attorney Today

At Mara Law Firm, we help all types of employees who receive all types of compensation, including hourly wages, salaries, commissions, piece-rate pay, and more. Contact us if you believe your employer might be violating your wage rights. We can help.

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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by attorney David Mara who has more than 20 years of legal experience in employment law.

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