Workers Owed Overtime Whether Paid by Piece or by Hour, DOL Settlements Show
Author: Michael Cardman, XpertHR Legal Editor
April 6, 2018
As recent settlements by the US Department of Labor (DOL) show, just because employees are paid by the piece produced rather than by the hour, does not mean they are not entitled to overtime when they work more than 40 hours in a workweek.
Following a recent DOL investigation, 11 roofing companies in Florida agreed to pay about $1,000 to each of their 259 employees who had been paid a piece rate without regard to the actual number of hours they had worked.
When an employee is paid on a piece-rate basis (for example, $50 for every 10-foot-by-10-foot square of roofing installed), the Fair Labor Standards Act (FLSA) requires that the regular rate of pay be computed by adding the total earnings for the workweek and then dividing by the number of hours worked in that week to yield the pieceworker's regular rate for that week. The employee is then owed overtime at one-half this regular rate for each hour over 40 in the workweek (not one and one-half times the regular rate, as with hourly work, because the piece-rate pay accounts for the "one" of the "one and one-half" overtime rate required by the FLSA).
Alternatively, pieceworkers may be paid one and one-half times their piece rate for each piece produced during overtime hours, as long as:
- The piece rate is the one actually paid during nonovertime hours;
- The piece rate yields at least the minimum wage per hour; and
- The employee agreed to it in advance.
Ignorance is no defense for failure to comply with these or any other FLSA requirements, the DOL reminded employers.
"Employers must understand their obligations and responsibilities under the law. Pay practices must comply with the law," said Wage and Hour Division District Director James Schmidt, in Tampa.