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Washington High Court: Piece Rate Compensation Alone Does Not Satisfy Rest Break Pay Requirement

  • July 23, 2015

The Washington Supreme Court has ruled that employers must provide agricultural piece rate workers with extra compensation for their rest periods, rejecting the employer’s argument that its piece rate already included compensation for the required rest periods. Demetrio v. Sakuma Bros. Farms, Inc., 2015 Wash. LEXIS 807 (Wash. July 16, 2015).

As with all compensation methods, piece rate compensation plans (under which an employee is compensated based on the number of “pieces” he or she generates or completes) must be analyzed for wage-and-hour compliance. Where applicable, employers also must ensure piece rate employees’ compensation meets all applicable state requirements, which supplement the federal requirements for most employers.

This case concerned the Washington agricultural rest break requirement (WAC 296-131-020(2)), which provides that “[e]very employee shall be allowed a rest period of at least ten minutes, on the employers time, in each four-hour period of employment.” (Emphasis added.) The plaintiffs were seasonal workers who picked berries on the defendant’s berry farm under a piece rate system of compensation, i.e., they were paid “an amount per pound or per box of fruit harvested.”

The plaintiffs argued that the defendant’s pay system “deprived them of [required] paid rest breaks.” The regulation's phrase, “on the employer’s time,” they contended, required the defendant to “pay a wage separate from the piece rate for the 10-minute period they are on break, since no piece rate wages accumulate during that time.” The defendant urged that it had “set[] the piece rate with rest periods in mind and that breaks are therefore ‘on the employer’s time’” as the regulation requires.

The Supreme Court, answering two certified questions from the U.S. District Court for the Western District of Washington, noted that actually taking rest breaks mitigates the dangers of agricultural work — “one of the most dangerous industries in America” — by allowing employees like the plaintiffs to sit, cool down, and rehydrate. The Court expressed concern that permitting a piece rate to compensate the employees for both rest periods and productive work would incentivize or encourage employees to work through rest breaks to increase their earnings, undermining the regulation’s purpose.

The Court therefore ruled that the rest periods must be compensated at what it termed the piece worker’s regular rate of pay or the applicable minimum wage, whichever is greater. In this context, the Court instructed affected employers to compute the pieceworker’s regular rate of pay for rest break compensation by dividing the total piece rate compensation for the workweek by the total hours worked, excluding the required rest break time. (The Court contrasted this computation for rest break compliance purposes with that needed to assess minimum wage compliance, expressly noting that the paid rest break time is included in the denominator when the question is minimum wage compliance.)

Demetrio highlights the detailed nature of some state law rules, and the need to carefully review compensation plans for compliance therewith. California law imposes a requirement similar to Washington’s for piece rate workers. The Washington court’s decision reiterates earlier Washington case law imposing rest period payment obligations in the non-agricultural context, where a separate but very similar regulation applies. Left unresolved, however, is whether the Washington court’s ruling impacts other non-hourly payment plans used to compensate non-exempt Washington employees.

Jackson Lewis attorneys are available to answer inquiries regarding this and other workplace laws.

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