By Greg Smith posted in Wage & Hour Claims on Wednesday, April 6, 2016
Often an employer will tell his employees he doesn’t have to pay overtime because he pays via the “piece rate method.” This is especially prominent in the construction industry.
So, if Billy gets paid $20 for every toilet he unclogs and unclogs 5 toilets per day, he gets paid $100. If he only works seven hours per day, five days per week, all is well. After all, $100/7 = $14.28 an hour.
Because minimum wage is $7.25 an hour, his boss is in the clear, and because Billy works only 35 hours per week, overtime is not an issue.
However, if Billy works 45 hours per week, he is owed overtime. Here is how it works according to the United States Department of Labor:
Billy gets a new job because his old job was just too far away from his home. At his new job he works 45 hours in a week and earns $405. It’s a piece rate job, too (assembling widgets &em; he gets $52.62 cents for every widget he puts together). His “regular rate of pay” for that week is $405 (his total pay) divided by 45 (the total hours per week he worked) or $9.00 an hour.
In other words, once you work overtime, it does NOT matter what you get paid by piece rate. Piece rate only matters so long as you are working fewer than 40 hours per week.
In addition to the straight-time pay, Bill is also entitled to five hours of overtime, which is $4.50 (half the regular rate) times five hours (the number above 40). In other words, the employer already paid him $9 an hour for EVERY hour he worked. But, for those other five hours, he was supposed to paid time and a half. But, he only paid time. So, Billy is still owed for the half.
Billy’s boss can pay Billy overtime another way, too. But this way REQUIRES Billy’s approval BEFORE Billy works any overtime, and that method is to pay Billy piece rate and a half for all the hours Billy works beyond 40. In other words, once Billy hits 40 hours, even widget he makes from then on (for the rest of the week) will pay him $52.62 time 150%. So, $52.62 times 1.5 = $78.93.
Again, that can be done only if agreed to before the work is performed. “The piece rate must be the one actually paid during non-overtime hours and must be enough to yield at least the minimum wage per hour.”
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