Overtime Compensation for Employees Paid By Piece Rate

Shavitz Law Group

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.

Police, Firefighter and Paramedics and Overtime Pay

Shavitz Law Group

Pursuant to the Fair Labor Standards Act (“FLSA”), police officers, firefighters and paramedics are entitled to overtime. Significantly, there are specific rules under the FLSA that apply to police officers, firefighters and paramedics.  Traditionally, employees covered by the FLSA are entitled to overtime pay for the hours they work over 40 in a workweek (7 days).  However, under the FLSA, public-sector (government) employers can establish special “7(k) work periods” which changes the traditional 40-hour “threshold” that a police officer, firefighter or paramedic must work before earning overtime pay.

Under 29 USC §207(k), a public-sector employer may choose a 7(k) work period, ranging from 7 days to 28 days.  Depending on the period chosen, the FLSA specifically prescribes a certain number of hours that police officers, firefighters or paramedics must work before they beginning earning overtime.  See 29 CFR 553.230.  For example, if a 7 day period is chosen, police officers must work at least 43 hours in 7 days before they can beginning earning overtime.  Firefighters and paramedics on the other hand would have to work at least 53 hours in 7 days before they begin earning overtime.  Separately, if a 28 day period is chosen, police officers would be required to work at least 171 hours within 28 days before they begin to earn overtime (i.e., roughly 6.11 hours per day) while firefighters and paramedics would be required to work at least 212 hours in 28 days (i.e., roughly 7.57 hours per day).

In addition to altering the work period which in turn triggers the overtime threshold, the FLSA also separately defines what can be considered “compensable time” for police officers, firefighters and paramedics.  “Compensable time” affects whether such employees have met the threshold at which they will start earning overtime pay. The regulations define “compensable time” for police officers, firefighters and paramedics to include:

all of the time during which an employee is on duty on the employer’s premises or at a prescribed workplace, as well as all other time during which the employee is suffered or permitted to work for the employer. Such time includes all pre-shift and post-shift activities which are an integral part of the employee’s principal activity or which are closely related to the performance of the principal activity, such as attending roll call, writing up and completing tickets or reports, and washing and re-racking fire hoses.

29 CFR 553.221.  For example, under this regulation, even time spent taking care of a K-9 unit at an officer’s home has been considered by some courts to be compensable time under this definition as the care is closely related to the performance of the officer’s principal activity.  See Hellmers v. Town of Vestal, 969 F. Supp. 837, 842 (N.D.N.Y. 1997) (“Time spent grooming, bathing, exercising, cleaning, and training the police dog is ‘required by the employer and is pursued necessarily and primarily for the benefit of’ the employer, and is thus ‘work’ under the FLSA.”).  Such may not be the case for a non-public sector employee.

If you are employed as a police officer, firefighter or paramedic, it is often difficult to determine whether you have been fully compensated for all hours worked. The overtime laws applicable to your profession just are not the same “40 hour threshold” as they are for other employees.  Thus, if you think you are not being fully compensated for all hours worked, you should consult with an attorney to review your particular situation.  The law prescribes certain time limits to assert your claim for unpaid wages. Therefore, do not hesitate to contact an attorney if you believe your overtime rights have been violated, so that you do not waive your right to collect the wages you already have earned and to which you are entitled.

5 Things to Know About Tipped Employee Pay

Shavitz Law Group

The law permits an employer to pay an employee less per hour than the minimum wage rate IF the employee is one who regularly receives tips as a traditional part of the job. (The current federal minimum wage rate is $7.25/hr. and the current Florida minimum wage rate is $7.79/hr.)  However, an employer of a tipped employee is NOT allowed to do certain things which include:

1.     An employer or manager cannot require the tipped employee to work “off the clock”.   Many servers are often required to report to work and set up tables and not permitted to clock in until customers begin to arrive.  That unpaid work may mean you have a claim to unpaid wages.

2.     An employer or manager cannot require an employee who is paid less than the minimum wage to incur the expense of having to launder their own uniform.  If you experienced this situation, you may be entitled to compensation.

3.     An employer or manager cannot deduct from a tipped employee’s compensation for any breakages caused by the server, or deduct from the server for any customer who fails to pay their bill.  If you experienced this situation, you may be entitled to compensation.

4.     An employer or manager is not allowed to share tips with non-tipped employees for, in, or to the extent there is a tip pool.  Thus, for example, management is not allowed to take any money out of a tip pool to pay any non-server or bus-boy.  Thus, for example, if the employer shares tips with cooks, hostesses, or managers, such sharing is typically illegal.  If you experienced this situation, you may have been underpaid and be entitled to compensation.

5.        An employer or manager is not allowed to require tipped employees to spend more than 20% of their time in a week performing work that does not generate tips (for example, such as cleaning, setting up tables, etc.), and still claim the tip credit for the time spent performing such work. If you experienced this situation, you may be entitled to compensation.

If you experienced any of these situations, you may have been underpaid and be entitled to compensation.  We invite you to contact us for a free consultation at www.shavitzlaw.com or email us at [email protected].

For those employers who pay their tipped employees by the hour, mistakes in pay are common, whether deliberate or unintentional.  We invite you to check with us to confirm the proper pay rates and calculations for your situation.  Tipped employees should be paid time-and-a-half wages for each hour worked over, or in excess of, forty hours in a week.  Many employers miscalculate the proper overtime rate of pay for tipped employees because of the tip credit, and as a result of such mistakes, you may be owed additional overtime pay.