piecework

Does the legal minimum wage apply to employees who do piecework?

Yes. The term piecework simply describes a type of employment for which an employee is paid a fixed piece rate for each unit produced or action performed. A man installing a granite counter in a private home, a dock worker stacking boxes, an auto mechanic doing an oil change, a worker picking apples at an orchard, and a person who sits at home and copies addresses onto envelopes could all be doing piecework depending on how they are paid. The last example (doing work at home) is the most commonly recognized form of piecework and is sometimes referred to as “industrial homework."

All individually covered homework and piecework is subject to the Fair Labor Standards Act (FLSA) minimum wage, overtime, and record-keeping requirements, although there are exceptions for some types of agricultural work. The piece rate must be the one actually paid during non-overtime hours and must be enough to yield at least the minimum wage per hour. The payment to the employee is converted into the “regular rate" for the pay period, and if it is less than the minimum hourly wage, the employer must pay the difference to comply with the state or federal minimum wage, whichever is higher

The regular rate of pay for an employee paid on a piecework basis is obtained by dividing the total weekly earnings by the total number of hours worked in that week. For example, an employee paid on a piecework basis produces 30 widgets in 45 hours of work. The employee is paid $12 per widget and earns $360. The regular rate of pay for that week is $360 divided by 45, or $8 an hour, which exceeds federal minimum wage (but may not exceed some states' minimum wage) requirements, so the employer does not have to make up the difference. However, the employee is also entitled to overtime pay for each hour over 40. In the above example, in addition to the straight-time pay, the employee is also entitled to $4 (half the $8 regular rate) for each hour over 40 for a total of $20. This amount is combined with the regular rate of pay for a total of $380 due to the employee for the 30 widgets. It is possible for the regular rate to meet or exceed the minimum wage during one pay period and to fall short the next

The FLSA also requires that certain records be kept of the work done by the employee. The records, at a minimum, must show the number of pieces completed and hours worked on a daily and weekly basis. Individual states may have stricter requirements.

Helen M. Kemp, Division Counsel and Assistant Director, Retirement and Benefit Services, Office of the State Comptroller, State of Connecticut