California Piece-Workers Win Major Victory; Court Upholds $1.8 Million Award to Auto Mechanics in Unpaid Waiting Time Case

In a major victory for piece-rate workers throughout California, the California Court of Appeal has decided that piece-rate pay systems that do not provide compensation for time spent on so-called “non-productive” tasks violate California’s minimum wage law.

The case, Gonzalez v. Downtown LA Motors, involves a group of Mercedes-Benz auto mechanics who were not allowed to leave their employer’s premises while waiting for vehicles to repair but were expected to perform various non-repair tasks such as cleaning their work areas, obtaining parts, participating in on-line training, and reviewing service bulletins.  The mechanics received pay only for the repairs they performed. The employer argued that it complied with the minimum wage law because when all the hours mechanics were at work were divided into their total pay, the average compensation was greater than the minimum wage.

The Court of Appeal said no, you can’t do it that way.  The employer had to provide additional pay during all hours worked, including time spent waiting for vehicles to repair.  Even if the mechanics were not engaged in other specific tasks suggested by the employer, time spent waiting for vehicles had to be paid because the workers were required to remain at work under the employer’s control.

The decision in Downtown LA Motors is expected to have widespread impact on employers who use piece-rate systems to incentivize workers to become their own taskmasters.  Increasingly, piece-rate systems have become the norm for many workers who were formerly paid by the hour.  This includes telemarketing workers, truck drivers, and auto mechanics.  The decision also applies to traditional piece-workers such as farmworkers who are paid only for what they pick when they are required to perform other “nonproductive” tasks (such as cleaning baskets in which they gather fruit or vegetables) for which they are not compensated.

At issue was language in the Wage Orders that govern most California employers:

Every employer shall pay to each employee, on the established payday for the period involved, not less than the applicable minimum wage for all hours worked in the payroll period, whether the remuneration is measured by time, piece, commission, or otherwise   (Cal. Code Regs., tit. 8, § 11040, subd. (4)(B).)

“Hours worked” is defined in the Wage Orders as:

The time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.  (Cal. Code Regs., tit. 8, § 11040, subd. (2)(K).)

The Downtown LA Motors extends to piece workers an interpretation of these provisions that the Court of Appeal earlier adopted on behalf of workers paid on an hourly basis in the 2005 decision, Armenta v. Osmose. In Armenta, the Court of Appeal held that the requirement to pay workers for “all hours worked” means hourly employees must be paid for “each hour worked,” even if the employer defined some of the work hours as “nonproductive.”  Because the employer did not provide separate pay for time spent on tasks that the employer deemed “nonproductive,”the employer’s method of averaging employees’ hours worked in order to compute its minimum wage obligations violated the minimum wage law.

The workers in Armenta were employed by a company that maintained utility poles in rural or remote locations.  The company provided the employees with a truck that carried the tools and equipment needed to perform the work in the field, and employees were required to travel in the truck from a central meeting place to the various job sites.  Employees’ time was considered “productive” if directly related to maintaining utility poles in the field and “nonproductive” if spent performing other tasks such as traveling to and from a job site, loading or maintaining vehicles, and attending safety meetings.  Employees were only paid for “productive” time.

Since Armenta, a number of state and federal  courts have applied Armenta’s rule to a wide variety of situations including piece-rate and commission work, but Downtown LA Motors marks the first published appellate decision holding that workers paid by the piece are entitled to receive no less than the minimum wage for all work time, including periods when they are unable to work directly on the pieces for which they are paid.

The case is Gonzalez v. Downtown L.A. Motors, LP, No. B235292 (Cal. Ct. App. Mar. 6, 2013, ordered published Apr. 2, 2013.)  You can read it for yourself here.

By Ted Franklin

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