No, I haven’t been drinking.
But, perhaps starting to show my age a bit — just a bit — I had one of those “angry man yells at cloud” moments recently as I lamented about how MTV doesn’t make music videos like they used to.
Do they even make music videos anymore?
Take, for example, Falling to Pieces by Faith No More. Whoever conceptualized this masterpiece should be in the music video hall of fame or institutionalized. Either way, it rescued the band from one-hit-wonder status.
It also provides a nice segue into today’s post about piece rates and the Fair Labor Standards Act, about which the U.S. Department of Labor opined recently in, you guessed it, an opinion letter.
FLSA2020-17 addresses whether employers may calculate the regular rate of pay of an employee whom it pays on a piece-rate basis by dividing total earnings by the number of productive and nonproductive hours worked during the workweek without a specific agreement with the employee to use such calculation.
Truly fascinating — zzzzzzzzzzzzzzzzzzzzzzzzz — stuff.
(You may want to blast Living Colour’s Cult of Personality — another five-star music video — to stay awake through this one.)
Ok, let’s see if I can keep this brief and punchy with a few bullet points:
- The FLSA mandates overtime of at least one-and-a-half of a non-exempt employee’s regular pay rate when s/he works more than 40 hours in a workweek.
- You calculate the regular pay rate by dividing all pay for employment by the number of hours worked.
- The same rules apply for employees that you pay per piece — take the total piece earnings (plus nonexcludable supplemental pay) and divide by the total number of hours worked, including productive time and waiting time.
- The FLSA also requires that employers pay employees for non-productive working hours.
- But, employers and employees can agree that the piece rate is meant to cover all hours worked, whether productive or not.
(Still with me?)
So, hypothetically, let’s say that you and your employees understand that piece-rate pay is intended to compensate employees for all hours worked, including non-productive hours. However, there is no document or writing that memorializes this. Rather, it’s just verbal — albeit without the employee understanding the precise mathematical methodology — and the parties’ act consistently with this verbal agreement.
Is that ok?
Yes, it is, says the DOL. “It is enough that the employer and employee mutually understand that piece-rate earnings are intended to compensate the employee for all hours worked. There is no need for an additional understanding regarding the precise method by which the pieceworker’s regular rate and overtime pay are calculated.”
Now, screw all that and don’t rely on a verbal understanding because you may find yourself paying someone like me to defend the company in a lawsuit to determine whether you and your employee had a meeting of the minds on piecework pay. Instead, document your pay practices and communicate them clearly in writing to your employees.