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Your Legal Corner - Client Alert Blog

California Minimum Wage Effect on Employees Paid on a Piece Rate Plan

Written By: Melissa C. Marsh, Esq., California Attorney, March 2016 Add to Favorites

In California, employees who are paid hourly must be paid at least the minimum wage for each increment of work time ($10 per hour in 2016 and $10.50 per hour in 2017). Why is this important? Because some employees are not paid hourly, but by what is commonly known as a piece rate plan. If an employer is paying his or her employees under a piece rate plan (e.g. a fixed dollar amount per item made, or task completed), it is imperative for the employer to ensure that the employee is being compensated properly, both as to the minimum wage and for meal and rest breaks.

Effective January 1, 2016, California Assembly Bill 1513 adds new Labor Code §226.2. Labor Code §226.2 sets forth the manner in which employees must be compensated on a “piece rate” basis (e.g. mechanic paid by job, HVAC repair man paid by the job, carpet installer paid by the yard, etc..) are paid.

California Labor Code § 226.2 requires employees paid on a piece-rate basis or task basis to be separately paid for non-productive time including meal and rest break periods and such must be properly reflected on the employee’s pay stub. The rate of compensation for meal and rest periods must be the greater of: (1) the minimum wage or (2) the average hourly rate determined by dividing the total compensation for the workweek, excluding overtime, by the total hours worked during the workweek.

Labor Code §226.2. further provides that the pay stub for an employee paid on a piece rate basis or task basis must (in addition to all other requirements) separately set forth: (1) the total hours of compensable rest periods, (2) the rate of compensation, and (3) the gross wages paid for those periods during the pay period. These rules are not applicable if the employee is paid both an hourly minimum wage and additional piece rate compensation.

With the recent increases in the California minimum wage (presently $10 per hour) as well as the slew of ever increasing local living wages by cities throughout California employers paying employees on a piece rate or per job basis must review their payroll to ensure their employees are being properly compensated.

Tags: piece rate
Posted In: Employment Law News 

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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.