Make sure to fairly compensate piece-rate employees

Published on: 15:23PM Nov 05, 2014

A recent settlement in Washington state has one farm potentially paying an out-of-court settlement amount that will approximate $850,000 for back pay and legal fees. You can find a full detail of the story here.

The lawsuit discussed in the article alleges the berry farm failed to pay workers for all the time they spent on the job, in violation of state wage laws and federal migrant labor laws. The more than 400 piece-rate pickers are in line to share $500,000 based on the proposed settlement.

In a piece-rate pay system, employees are compensated by the number of pieces or units they complete, which a great system assuming the following:

  • The employee does not work more than 40 hours in a workweek, and
  • The employee’s total compensation for the week averages at least the applicable minimum wage

The article does not speak to if the issue was overtime or minimum wage, however, this is a great reminder it is essential for employers to always maintain accurate daily and weekly time records for employees paid on a piece‑rate basis. Otherwise, without such records, the employer has no way to prove that the minimum wage and overtime pay requirements have been properly satisfied if a complaint is filed or government investigators come looking, which will always result in substantial penalties. Further, in a time when federal and state budgets are being cut, this would be easy money for the IRS or local state employment agencies and the quickest way to get an audit from them is a disgruntled employee.