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Piece Work, Day Rates and the Regular Rate. Part 2.

So let’s finish up piece work and day rates and job rates. So what happens if the employee gets a piece rate with an hourly minimum? In that case, the employee gets paid on a piece work basis unless he does not make a specific hourly rate for the workweek. If he or she does not produce enough to make the minimum for the week, the employee gets a guaranteed minimum hourly rate. Often that is the minimum wage, to avoid problems, but it can be more. As the regulations point out, what that really means is that in any workweek where the employee does not hit the minimum, what he or she is really doing is getting paid by the hour.

(b) Piece rates with minimum hourly guarantee. In some cases an employee is hired on a piece-rate basis coupled with a minimum hourly guaranty. Where the total piece-rate earnings for the workweek fall short of the amount that would be earned for the total hours of work at the guaranteed rate, the employee is paid the difference. In such weeks the employee is in fact paid at an hourly rate and the minimum hourly guaranty is the regular rate in that week. In the example just given, if the employee was guaranteed $11 an hour for productive working time, the employee would be paid $506 (46 hours at $11) for the 46 hours of productive work (instead of the $491 earned at piece rates). In a week in which no waiting time was involved, the employee would be owed an additional $5.50 (half time) for each of the 6 overtime hours worked, to bring the total compensation up to $539 (46 hours at $11 plus 6 hours at $5.50 or 40 hours at $11 plus 6 hours at $16.50). If the employee is paid at a different rate for waiting time, the regular rate is the weighted average of the 2 hourly rates, as discussed in §778.115.

29 CFR § 778.111(b).

So if the employee does not hit the minimum and you pay them the guaranteed rate, it’s the same calculation as if they were being paid an hourly rate. And in those workweeks in which the employee does produce over the minimum? In those weeks you use the calculation we talked about last week. And this is a good time to remind you that the workweek stands alone and that you don’t get to average over two workweeks in this case either. Just like you don’t get to average hours worked over two workweeks. And NO, it does not matter that you use a two week pay period. For minimum wage and overtime purposes, each workweek stands alone.

And that brings up a second point about pieceworkers. They must be paid at least the minimum wage for every hour worked in the workweek. Even if they don’t produce enough parts to make the minimum wage. Now that does not mean that if the employee misses for one hour in the workweek and goes over for every other hour in the workweek you have to pay him extra for that one hour. What it means is, at the end of the workweek, when you are figuring out how much the employee produced and what that converts to on an hourly basis, it has to average at least the minimum wage per hour. And once again, that is for EACH WORKWEEK, not averaged over two of them.

So how about day rates and job rates? Pretty easy.

If the employee is paid a flat sum for a day’s work or for doing a particular job, without regard to the number of hours worked in the day or at the job, and if he receives no other form of compensation for services, his regular rate is determined by totaling all the sums received at such day rates or job rates in the workweek and dividing by the total hours actually worked. He is then entitled to extra half-time pay at this rate for all hours worked in excess of 40 in the workweek.

29 CFR § 778.112.

Simple right? Total the amount received for the day or job rates, divide by total hours worked to get the regular rate and pay half time for everything over 40.

Next time we will start to get into salaries for non-exempt employees and it will get a bit more complicated.