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Piece-rate pay in California employment

Its not unusual in some industries (like auto repair, hair salons, flight instructors)  to sit and wait between customers. Employers in California, until recently at least, have tried to claim that if the average pay for the entire shift exceeded minimum wage, then there was in fact no violation of California’s minimum wage laws. A recent case pretty much ends that assumption. Employers will now have to pay employees at least the minimum wage for the time that the employer exerts any control, issues any type of direction or asks their employees to do work (such as cleaning, organizing, bringing files up to date) during non-piece rate times.

Gonzalez vs. Downtown LA Motors, LC. 215 Cal. App 4th 36 (2013) involves just such a case. The auto technicians alleged that the piece-rate basis was in violation of California’ Labor Code. LA Motors paid a flat rate for each “flag hour” that as service tech accrued doing a repair. The number of flag hours were determined by the employer, and were supposed to reflect the hours spent doing the repairs. Between flag hours, the workers were required to pick up parts, clean their work areas, attend meeting and visit other sites to pick up and drop off repaired cars. the company then compared “on the clock” hours against the minimum wage rates. If the minimum wage was higher than the flag hour, the company added the difference.

The Court of Appeals upheld the trial court in finding that this was a class-wide violation of the law. Wage Order No 4 requires an employer to pay no less than the applicable minimum wage for ALL hours worked in the payroll period. This is the “time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.”

In coming to its conclusion, the court reviewed a prior holding, Armenta vs. Osmose, Inc., 135 CA 4th 314 (2005), holding that averaging piece-rate hours and comparing them against total hours work to determine minimum wage violated the the law because the workers is not compensated for every “hour worked”.

A similar situation existed in Bluford vs. Safeway Stores, Inc., 216 Cal. App 4th 864 (2013), in which the court held that rest periods must be separately compensated in a piece-rate system. Thus, the “averaging” of hourly compensation to determine whether minimum wage compliance occurred, is illegal.

All of these cases have the common issue of “control” during non-piece rate times. Essentially, each case involved an employee who was forced to remain under the control of the company. Its hard to see any work-related duty (going to meetings, training, picking up or delivering cars). If you are terminated for complaining about not getting paid at least minimum wage, you may have a claim for termination in violation of public policy.