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What Is Piece-Rate Compensation?

Learn more about piece-rate compensation and why it matters to certain employees in California.
Piece Rate Compensation

What is Piece Rate Compensation?

In certain industries it is common for employers to pay workers on a “piece-rate” basis instead of by the hour. Unfortunately, certain employers use a piece-rate compensation basis in order to attempt to underpay their workers. Additionally, the employees may also not be aware that they are not being paid the wages that they are entitled to because the law has recently changed in California.

If you are a piece-rate employee and you have not been paid for non-productive time, you should know your legal rights and speak to a San Diego employment attorney right away. Here are a few things to know about California’s piece-rate compensation law to help you determine if you are owed wages by your employer.

Who Is Considered As A Piece-Rate Employee?

A piece-rate employee is one who is paid by the amount of measurable work completed, or according to the number of units turned out, rather than by the amount of time spent working. However, determining who is considered as a piece-rate employee can be tricky because piece-rate compensation can apply to many diverse situations, including:

  • Automobile mechanics paid on a “book rate” (i.e., brake job, 1 hour and 50 minutes, tune-up, 1 hour, etc.) usually based on the Chilton Manual or similar;
  • Nurses who are paid on the basis of the number of procedures performed;
  • Carpenters who are paid by the yard of carpet laid or by the linear foot on framing jobs;
  • Technicians who are paid by the number of units installed;
  • Factory workers who are paid by the widget completed.

If properly executed, this method of compensation is legal and is designed to help motivate employees to increase their productivity beyond what time-based compensation might yield. In addition, it is also designed to benefit the worker because the worker can earn more by becoming more productive.


What Is AB 1513?

AB 1513 (Piece-Rate Compensation) is a new section of the California Labor Code that went into effect on January 1, 2016. It establishes compensation and wage statement requirements for piece-rate employees and creates a defense for employees to bring claims against an employer if they fail to pay compensation for rest and recovery periods and other non-productive time that an employee should have been paid.

Under California law, piece-rate workers are required to receive compensation for non-productive time that is separate from their piece-rate compensation. The rate of compensation must also be the higher of the applicable minimum wage or the employee’s average hourly rate.

The average hourly rate must be determined by dividing the total compensation for the workweek, exclusive of any compensation that was paid for rest and recovery periods and overtime, by the total number of hours worked during the workweek, exclusive of the time that was taken for rest and recovery periods.


Which Employees Are Exempt From AB 1513?

Some types of employees are exempt from receiving additional compensation for non-productive periods under AB 1513. These employees are employees who are compensated on a commission basis. A compensation plan that is considered to be commission compensation is one that pays based on a percentage of a sale.


Types of Situations That Fall Under AB 1513

Every piece-rate claim is different. If you are trying to determine if you should file a claim against your employer for failing to compensation you, you need to know whether your employer is in violation of the law.

You may be eligible to file a piece-rate claim if:

  • Your employer has misclassified your compensation as commission-based in order to avoid paying you wages for non-productive time.
  • You have not been compensated for valid non-productive time.
  • Your employer prevents you from taking rest periods if you have worked more than 3.5 hours in a single day in order to avoid having to pay you for non-productive time.
  • Your employer has not compensated you for non-productive time in which you are still under the employer’s control, exclusive of rest and recovery periods.
  • Your employer has retaliated against you after you have filed a claim for unpaid non-productive time wages.


What Should You Do If You Believe You Have a California Piece-Rate Law Case?

While employers can design piece-rate compensation plans, they may not opt out for paying you for non-productive time, unless your pay is considered to be commission-based. In addition, all piece-rate employees must be compensated according to their average hourly rates and must be paid overtime according to the existing California overtime statutes.

If you believe that you have a piece-rate case, you should contact a San Diego attorney right away. Delaying your claim could potentially harm your chances of receiving the compensation that you are owed. If you would like someone to review your case today, send us an email or call Walker Law at (619) 839-9978 to schedule your free consultation.

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