URGENT:Piece Rate and Commission Pay Systems in Jeopardy!
The California Supreme Court has denied a petition to review the appellate court decision in Gonzalez v. Downtown LA Motors, despite support from national and state-wide trade associations representing car dealers, grocers, retailers, agriculture, trucking, large corporations, and small businesses. Now, any employer in California paying piece-rate pay, including flag hours, and commissions as the exclusive forms of payment to employees may be violating California law. In Gonzalez, the trial court reviewed an analysis of piece rate (flag hour) tasks performed by service technicians and ordered that unrecorded time in between those tasks had to be paid on an hourly basis, even though pay for all hours worked in the payroll period far exceeded the applicable minimum wage. The damage award in excess of $1.2 million now stands. A similar order against Safeway involving payment by piece rate held that the food chain must pay employees separately for rest periods at an hourly rate.
Separately, a federal district court has ruled that Nordstrom must pay its sales people at an hourly rate when they are not engaged in selling activities, even though Nordstrom guarantees pay above minimum wage and many employees earn very substantial commissions far above minimum wage in every pay check.
Unless this gutting of piece rate and commission pay is reversed, almost every employer in California that has paid piece rate or commission believing it covers all hours worked in the pay period when the employee has earned more than least minimum wage for the period faces liability for back pay. Claims will be made that any time in between assigned tasks or actual sales must be paid at minimum wage, regardless of the employee’s earnings. The statute of limitations is three years and, in some instances, may be four years. A class action claim may, in some cases, be defeated if the employer is able to enforce an individual arbitration agreement.
This week, Art Silbergeld, the attorney Potts & Associates has always recommended to help our clients address wage claims and other employment disputes and to defend them in litigation, was again named by The Los Angeles Daily Journal as one of the Top 75 employment litigators in California. He has been working with the California New Car Dealers Association and other trade associations on this critical issue. If you have any questions about the status of wage law affecting your own practices, recording time at work, or undertaking an internal audit or if your company faces a dispute over the piece rate or commission issue, Art is available to speak with you at (310) 772-8308. SilbergeldA@dicksteinshapiro.com