Supreme Court to Address Piece Rate Pay

Oct 17, 2014

By Sarah L. Wixson | Related Practices: Agriculture and Employment

Piece rates are a common way to pay farm workers for harvesting fruit and other tasks.  A piece rate establishes in advance the labor cost for harvest.  A piece rate also rewards productivity.  The faster worker gets paid more.  A properly set piece rate can benefit both the employer and the worker.

Washington piece rate workers brought suit in federal court in the  case of  Paz v. Sakuma Bros.,  and argued that they weren’t allowed rest breaks and weren’t paid for rest breaks as required by law.  The federal court has asked the Washington Supreme Court to rule on several issues in that case.  The Washington Supreme Court’s answers could significantly impact piece-rate compensation and may result in substantial back pay claims for piece rate workers.

The federal court posed the following questions to the Washington Supreme Court:

1.  Does a Washington agricultural employer have an obligation under WAC 296-131-020(2) and/or the Washington Minimum Wage act to separately pay piece rate workers for the rest break to which they are entitled?

and

2.  If the answer is yes, how must employers calculate the rate of pay for the rest break time?

Farm workers, under Washington law, are entitled to rest and meal breaks.  Farm workers receive an unpaid meal break of 30 minutes.  In addition,  “[e]very employee shall be allowed a rest period of at least ten minutes, on the employer's time, in each four-hour period of employment.” WAC 296-131-020.   Workers are allowed a paid break.  In the case of an hourly worker, this presents no problem.  They stop working, but remain on the clock during their rest periods.

But when a piece rate worker stops working, arguably because they are paid based upon productivity, they are no longer being paid.  Washington law does not expressly address this issue.  Our regulation, WAC 296-131-020, states that “[f]or purposes of computing the minimum wage on a piecework basis, the time allotted an employee for rest periods shall be included in the number of hours for which the minimum wage must be paid.”  WAC 296-131-020.  Therefore, break time is included in the piece rate calculation, but does that mean that workers are actually paid for their breaks?

Recent decisions out of California courts[1] have held that under California’s wage laws, nonproductive time, including break times, must be compensated under a separate hourly minimum wage.  Worker advocates in the Paz  v. Sakuma case are advocating a similar approach in Washington.  This could have a substantial impact on the agricultural industry.  Wage claims generally have a statute of limitations of three years and arguably, because this involves an interpretation of an existing law rather than the implementation of a new law, it would be retroactively applied.  An additional 20 minutes a day for every worker that worked for the last three years will add up fast.

There is a great deal of uncertainty, but there are some things that an agricultural employer can do  now to minimize their risks.

1. Encourage employees to take meal and rest breaks.

Provide water, shade tents and restrooms as required by law, and encourage employees to use them.  Make sure your employees know that you honor meal and rest break regulations.  Train managers to permit employees to take breaks and not to penalize any worker for taking statutory breaks.

2.  Get a waiver of rest breaks if appropriate.

In contrast to the mandatory requirement that an employee “shall receive” a meal break, the law states that an employee “shall be allowed” a rest break. WAC 296-131-020.  Therefore, the worker arguably has a choice and may decline or waive a rest break.  In practice, many workers do not want to take a rest break.  However, to counter an assertion later on that the employer wrongfully denied rest breaks,  employers should inform workers of their right to rest breaks in written handbooks or policies (which should be readily available and posted in English and Spanish ) and encourage workers to report if they are being denied breaks.  Employers have also been obtaining written rest break waivers from employees who do not want to take a break.  The written waiver is a fairly recent phenomenon; no Washington court has decided whether these waivers are valid. Remember, workers may not waive meal breaks, with or without signing a form.

3.  Pay for breaks.

Another option is to pay for an extra 20 minutes a day.  However, the second issue before the Supreme Court is:  if breaks are to be separately compensated, what is the applicable rate?  Is it the minimum wage?  At minimum wage, if the break can be waived, it is likely that most workers will waive the break because they can make more than minimum wage during that 20 minutes.  Or is it a calculation based upon the established piece rate per hour for each worker each week?  Or is it some other method?  The amount of payment required is anybody’s guess.

4.  Agree that the piece rate pay is for all work.   

Under federal law, an employer and employee may agree that the pay the worker earns for productive work is intended to compensate him or her for all hours worked, both productive and nonproductive (including breaks), and in such a case, the employee's regular rate is determined by dividing the total earnings by the total hours worked in the workweek.  29 CFR 778.318(c).  A signed agreement, which can be incorporated into an existing acknowledgment or a standalone document should read something like this:

I agree that I may be paid a piece rate.  I understand that piece rates fluctuate throughout the crop year and harvest periods.  I agree that the piece rate is intended to compensate for all hours of work performed whether productive (piece-producing) or not, including rest breaks. 

Employers should also revise their MSPA notice to include similar language.   

5.  Be heard.  

The issues before the Supreme Court will potentially impact the entire agricultural industry in Washington.  There are two ways the agricultural community can let their voices be heard.  The first is to submit amicus briefs to the Washington Supreme Court (an amicus brief is an opportunity for outside parties to weigh in on a case) so that the Court is aware of the larger picture before it decides this issue.  The second way to be heard is to contact your legislative representatives.

 

[1] Gonzalez v. Downtown LA Motors, 215 Cal.App.4th 36, (2013), and Quezada v. Con–Way Freight, Inc., No. 09–3670, 2012 WL 4901423 (N.D.Cal. Oct. 15, 2012), held that  employees must be paid minimum wage for non-piece producing time.  Bluford v. Safeway Inc. 216 Cal.App.4th 864 (2013)  held that employees must be separately compensated for rest breaks.