Legal Question in Employment Law in Arizona

Re: dept of labor assessment

Nothing in the Fair Labor Standards Act (�FLSA�) prohibits an employer from instituting a piece work compensation scheme. In fact, the FLSA clearly contemplates such a system. See 29 U.S.C. � 207(g). Piece workers, as they are called, however, are entitled to overtime pay for all hours worked in excess of 40 hours in given week. 29 C.F.R. � 778.418. That is, there is no exemption for piece workers. Piece work wages must meet the FLSA�s minimum wage requirements.

It does appear, however, that there is some flexibility in determining a piece worker�s regular rate, i.e., the rate an employer must multiply by 1.5 for all hours in excess of 40 a week. This is especially so when an employer pays its employees on a combination piece work/hourly basis. 29 C.F.R. � 778.420. A company employing a combined hourly and piece work rate can choose to pay an employee 1.5 times the employee�s hourly rate or 1.5 times the employee�s piece work rate. Id.

If an employer institutes a wholly piece work compensation scheme, the employer, in order to determine the amount of overtime due, must first take the employee�s wages for the week in question and divide that by the number of hours worked. That will be the employee�s regular rate. The employer must then multiply by 1.5 the employee�s regular rate to determine the employee�s overtime rate. The employer must then multiply that product by the number of hours in excess of 40.

The FLSA is a complicated set of statutes. It is usually impossible to review a given set of facts and make a definitive determination as to whether a work arrangement is in violation of the law. A careful review of a company's compensation policies and practices will be necessary before there can be a determination as to compliance with the FLSA.