Washington Supreme Court Rules Piece Rate Workers Entitled to Paid Rest Breaks
The Washington Supreme Court issued a ruling in Demetrio v. Sakuma requiring employers to provide paid rest breaks to piece rate workers. This ruling has enormous implications on the wage and rest break practices of all employers with employees paid by the piece or by production and take effect immediately. Starting today, employers should implement the following wage practices:
1. Schedule rest breaks and ensure that employees take them. It is the employer's obligation to make sure that rest breaks are taken. You should schedule your rest break times and enforce them. Make sure that they are being taken. Document rest break times daily to avoid disputes. For practical purposes, rest breaks begin when the last worker either leaves the field or work area and end when the first person returns to the work area.
Recommended practice: Require employees to confirm in writing that rest breaks were taken each pay period.
2. Rest breaks must be paid separately. You will need to add 10 minutes of extra pay for each rest break. Rest breaks are 10 minutes every four hours.
3. Rest breaks are paid at each employee’s applicable earned rate (not minimum wage). Rest breaks are paid based upon the individual piece rate earned per pay period on an employee by employee basis. Each employee will likely have a different rate and those rates will change pay period to pay period. The effective piece rate calculation for rest breaks is slightly different than the one that you are doing to ensure piece rate pay is at least equivalent to the minimum wage each pay period.
The hypothetical calculations by the Supreme Court in the Sakuma decision highlight the differences in the minimum wage calculation and the rest break piece rate calculation*:
Suppose an employee is paid 50 cents per pound of fruit picked (the piece rate). The employee works five eight-hour days and takes 20 minutes of rest breaks each day, as provided by WAC 296-131-020(2). The employee has spent 38.6 hours producing and 1.4 hours on breaks, for 40 hours of total work. If the employee produces 750 pounds of fruit, he or she earns $375.00 that week. Thus, the employer divides the employee's total piece rate earnings ($375.00) by 40 hours, which equals only $9.38 per hour. The employer must increase the worker's total piece rate earnings to meet the $9.47 state minimum wage, if that is the highest applicable minimum wage in the locality.
In the previous example, the employee's regular rate is $9.72 per hour that pay period. This results from dividing $375.00 (total piece rate earnings) by 38.6 hours (total hours in active production, exclusive of break time).
Therefore, even though the Court held that employees should be paid for rest breaks “at the employee’s regular rate," the Court’s hypothetical employee makes more during rest breaks ($9.72) than while working ($9.47).
4. Retroactivity (undetermined). The Court expressly avoided determining whether the ruling applies retroactively (i.e. whether employers have to pay for rest breaks that occurred before today’s decision). This issue will almost certainly be litigated before the Supreme Court at some time in the near future. That said, you should understand that retroactivity is overwhelmingly the norm, but the court does have discretion to make its decisions applicable on a go-forward-only basis to avoid harsh results. However, based on the fact that this was a unanimous decision and so overwhelmingly in favor of employee rights, employers should expect lawsuits and should collect and preserve information regarding breaks and wages going back at least three years.
The statute of limitation for wage and hour claims is three years. Accordingly, with each passing day, past rest break claims older than three years are being barred. You will likely have additional questions about the ruling and how it applies to your operation, both past and present. In addition, this ruling will likely require changes in your written policies and disclosures.
Bottom line: make sure employees are taking rest breaks and start paying for them today.
If you would like assistance modifying your wage and rest break policies or have questions about the decision, please contact a member of our Employment Group.
*The hypothetical example comes directly from the case. Upon examination, it was discovered that the rest breaks would be 1.65, not 1.4. The employee would have spent 38.35 hours producing and 1.65 hours in rest breaks.