Minimum Wage and Piece-Rate: Employees Must Receive Minimum Wage for Each Hour Worked Without Averaging

April 17, 2013 by Susan Garea

California has required minimum wage per hour to be paid to Employees rather than average minimum wage over the shift.  California law requires employers to pay a minimum wage for “all” hours worked. In the seminal case Armenta v. Osmore, Inc. (2005) 135 Cal.App.4th 314, a California Appellate Court ruled that California minimum wage law requires compensation at no less than the minimum wage for each hour worked. Therefore an employer’s scheme of paying higher than the minimum wage for “productive” hours and not paying employees for “nonproductive” hours violates California minimum wage law even when an employees’ averaged daily compensation was not less than the minimum wage. Under California law, in contrast to federal minimum wage law, employers cannot average hourly compensation to comply with minimum wage requirements. An employee must be compensated at or above the minimum wage for every hour worked.

In this very recent Employment Law case, Gonzalez v. Downtown Motors, LP, Case No. B235292 (March 6, 2013), a California Court of Appeals Court affirmed that this well-settled principle applies equally to piece-rate compensation schemes.  This case is meaningful to Employees in traditional piece-rate employment as well as technical and professional situations.

In Gonzalez, the Employer car dealership compensated its service technicians on a piece-rate basis. The piece rate paid was higher than minimum wage. However, the technicians worked eight-hour shifts and had to remain onsite during the entire shift, ready to serve customers, even when not working on a car. The Employer did not pay its technicians for the time spent at the work site not servicing cars. If the piece-rate wages for the pay period were less than the minimum wage for the total hours spent at the worksite during that pay period, the Employer’s policy was to make up the difference. Thus, by averaging, the Employer paid its technicians not less than the minimum wage for the day.

The Appellate Court held that the Employer violated California minimum wage law by failing to compensate the technicians for waiting time hours not compensated by the piece-rate. The Court flatly rejected the Employer’s argument that Armenta should not be applied to piece-rate compensation schemes, finding Armenta equally applicable to employees compensated on a piece-rate basis.

This case related to Employment Law is important clarification for Employees working in jobs where piece-rate compensation is the norm and could mean back wages resulting in compensation at the minimum wage for each hour worked.  Beeson, Tayer and Bodine attorneys regularly summarize recent court cases to help Employees, Employers and Unions keep up to date with legal requirements and rights related to employment and Labor Relations.  See BT&B News and Blog for more case summaries related to legal representation of employees in need of information on Employment Law.

Gonzalez v. Downtown Motors, LP, Case No. B235292 (March 6, 2013).  Summary provided by BT&B

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