What is piece-rate compensation?
Labor Code section 226.2 does not change the existing definition of what constitutes “piece-rate” compensation.
The existing Division of Labor Standards Enforcement Manual contains the following explanation of piece-rate compensation:
2.5.1 Piece-Rate or “Piece Work”
The American Heritage Dictionary defines the term piece-rate as: “Work paid for according to the number of units turned out.” Consequently, a piece-rate must be based upon an ascertainable figure paid for completing a particular task or making a particular piece of goods.
2.5.2 Examples of piece-rate plans
2.5.2 Examples of piece-rate plans can be as diverse as the following:
- Automobile mechanics paid on a “book rate” (i.e., brake job, one hour and fifty minutes, tune-up, one hour, etc.), usually based on the Chilton Manual or similar;
- Nurses paid on the basis of the number of procedures performed;
- Carpet layers paid by the yard of carpet laid;
- Technicians paid by the number of telephones installed;
- Factory workers paid by the widget completed;
- Carpenters paid by the linear foot on framing jobs.
2.5.3 A piece-rate plan of compensation
2.5.3 A piece-rate plan of compensation may include a group of employees who share in the wage earned for completing the task or making the product.
2.5.5.1 Piece-rate and commission plans
2.5.5.1 Piece-rate and commission plans may be in addition to an hourly rate or a salary rate of pay. Such plans may also be in the alternative to a salary or hourly rate. As an example, compensation plans may include salary plus commission or piece-rate; or a base or guaranteed salary or commission or piece-rate whichever is greater.
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