Paying employees by the job rather than by the hour has just become much more difficult. Employers can legally pay their employees a piece rate, so that they get paid by the work accomplished instead of by the time spent doing it. Paying a piece rate is common in some lines of work. Farmworkers picking fruit often get paid by the basket, and auto mechanics get paid by the type of repair. Paying by the piece is perfectly legal, so long as the employee receives the minimum wage of $8.00 an hour.
Should employees get paid for the time that they are on the job but not doing the work that makes them money? Once fruit pickers get on the farm, they still have to get to the orchard that needs picking. Mechanics spend time cleaning up, inventorying tools, educating themselves on new technology, or sometimes just waiting around for customers.
Many employers had assumed that, so long as the employee received a minimum wage for the pay period, they complied with the law. For example, an employee who works a 40-hour week and gets paid weekly should receive at least $320.00. That the employee spent half that time on work for which he is paid by the piece and the other half doing other tasks should not matter.
Not so, says a California Court of Appeal. Under Gonzalez v. Downtown LA Motors, a case involving auto mechanics, employees must get paid for every moment they are on the job. If they are doing tasks for which they are being paid a piece rate, they get their piece rate, which has to come out to at least $8.00 an hour. When they are doing something else, or doing nothing at all but still there, they get the minimum wage.
Gonzalez throws a monkey wrench into task-based pay. Now both employer and employee must keep track of the employee’s time when not performing piece-rate tasks. Piece rates encourage employees to work quickly so that they can finish the work and either get more done or go home. But an auto shop worried about paying mechanics for hanging around will have an incentive to slow them down.
The auto shop has appealed the decision to the California Supreme Court, which can decide it will hear it, or not. If it does decide to hear it, other courts do not have to rule the same way that the Gonzalez court did. But they might. Unless the Supreme Court decides to overturn Gonzalez, the law about paying piece rate will stay confusing.
The Gonzalez court only discussed paying a piece rate. But what about employees paid only a commission? Does the man from whom I buy my suits get minimum wage when he is not trying to sell me clothes?