Overtime Compensation for Employees Paid By Piece Rate

Employees who are paid on a piece-rate basis are entitled to overtime, although they may not be aware of their rights. “Piece rate” means that employees are paid a specific amount of money for each item they produce or task they perform.  For example, when cable technician is paid $15.00 for each utility line located, that employee is being paid on a piece rate basis.

 Notwithstanding the right of piece rate employees to overtime, some employers engage in various practices which deprive piece-rate employees of overtime compensation.  Such unlawful practices violate the Fair Labor Standards Act, the federal overtime and minimum wage law.

 Overtime compensation for piece rate employees is properly calculated by taking the total piece rate compensation earned by the employee in a given week, and then dividing it by the total number of hours the employee worked for that week.  The quotient of that division is the regular hourly rate of pay for the employee for that week.  To determine the employee’s overtime rate, you would then divide the regular rate of pay by 2.  The quotient of that division is the overtime rate.  The employee’s overtime compensation for that work week is the overtime rate multiplied by all hours in excess of 40 (overtime hours) that the employee worked that week.

While this calculation may sound complicated, an example demonstrates that the overtime for piece-rate employees is actually straight-forward:

A cable technician is paid on a piece rate basis.  In a work week, the technician earned $1.000.00 in piece rate compensation, and worked 50 hours.  Under this scenario, the overtime is calculated as follows:

$1,000.00 piece rate wages/50 hours = $20.00 regular rate

$20.00 regular rate/2 = $10.00 per hour overtime rate

$10.00 x 10 overtime hours = $100.00 overtime compensation.

Therefore, the cable technician is to be paid a total of $1,100.00 for the work he performed that week, which includes $1,000.00 in piece rate compensation and $100.00 in overtime compensation.

It is important to note that the overtime rate will fluctuate from week to week as the hours employees work and the piece rate compensation they earn each week fluctuate.  In some instances, an employee’s regular rate of pay may fall below the minimum wage.  In such a case, the employer is required to pay the employee the difference in compensation to ensure the employee is paid at or above the applicable minimum wage.  If the employer does not do this, the employee may have a claim for unpaid minimum wages.

Piece rate compensation plans are most common in ‘”blue collar” professions, such as cable technicians, air conditioning technicians/installers, plumbers, and electricians.

You Earned It,
Now Let's Go Get It.

Contact us to learn more about your right to overtime, fair pay, and equal treatment in the workplace.

Contact Us Today


Recent Posts