Does California law require employers to compensate piece-rate employees a separate hourly minimum wage for non-piece-rate-producing required hours?
The situation: wage and hour class action brought by automotive technicians against their employer who compensates repair work employees on a piece-rate basis; while total compensation would not drop below the "minimum wage floor" (total compensation for total number of hours), employees were not otherwise compensated anything for those specific hours they were required to be at the workplace either performing non-repair tasks or simply waiting for customers to show up. In Gonzalez v. Downtown LA Motors LP (filed 3/6/13; pub. order 4/2/13) B235292, the Los Angeles County trial court had found the above method of compensation violated the minimum wage law in that the law does not allow an employer to average total compensation over total hours worked in a pay period. Defendant-employer appealed. The Court of Appeal, Second Appellate District, Division Two, affirmed.
At issue in this case were California's minimum wage requirements promulgated by the Industrial Welfare Commission (IWC). Wage Order No. 4 requires an employer to pay to each employee for each pay period not less than the applicable minimum wage for all hours worked, defined as the time during which the employee is subject to the control of the employer. Plaintiffs' contention, adopted by both the trial and appellate court, was that the plain meaning of "all hours worked" is "each and every hour" worked.
Defendant argued that there should be no distinction between waiting and productive time when employees are paid as here on a piece-rate basis; that payment to employee for the productive time for which employee receives a premium flag rate for expected hours to complete task (but does not necessarily require that much time if employee is efficient) is blended with uncompensated hours during a pay period to determine satisfaction of minimum wage requirements. If there is then a shortfall, argues defendant, to be in compliance with the law, it need only supplement the technician's piece-rate wages to meet the minimum wage floor for the entire pay period.
While not specifically a case on piece-rate compensation, Armenta v. Osmose Inc. (2005) 135 Cal.App.4th 314 was found to be persuasive on this issue. The plaintiffs there were employed by a company that maintained utility poles in remote areas. Employees were paid only for "productive" time, time actually spent doing pole maintenance work. So-called "non-productive" time (travel and vehicle maintenance time, and time attending safety meetings) was not included. The employees there made the same "each and every hour" argument concerning minimum wage and prevailed.