Washington ‘piece rate’ workers must receive minimum wage

On questions certified to the Washington Supreme Court from a federal district court, the state high court held that pay for rest breaks, separate from piece rate, followed the plain language of WAC 296-131-020(2), and is consistent with Washington case law interpreting rest break regulations. Moreover, the court determined that the regulation requires that rest breaks for pieceworkers be paid at least at the applicable minimum wage or the employee’s regular rate, whichever is greater.

In 2013, two farmworkers instituted a class action suit against the employer asserting that its piece rate wage system deprived them of paid rest breaks as required by Washington regulation, WAC 296-131-020(2), which provides that “[e]very employee shall be allowed a rest period of at least ten minutes, on the employer’s time, in each four-hour period of employment.” The employer paid a “piece rate” wage based on the workers’ productivity. The piece rate was the only compensation received by the employees. According to the employees, “on the employer’s time” means that the employer must 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.

Certified questions. While the case was pending in federal district court, the employer agreed to settle the workers’ retroactive claims, but it denied liability and expressly preserved its challenge to the employees’ prospective claim that it must pay for the time piece-rate workers spent on rest breaks. The federal court granted the employees’ motion to certify two questions related to that claim to the Washington Supreme Court: (1) Does a Washington agricultural employer have an obligation under WAC 296-131-020(2) and/or the Washington Minimum Wage Act [(MWA), ch. 49.46 RCW,] to separately pay piece-rate workers for the rest breaks to which they are entitled? (2) If the answer is “yes,” how must employers calculate the rate of pay for the rest break time to which piece-rate workers are entitled?

First certified question. The court first examined whether pay separate from the piece rate is owed to pieceworkers for rest breaks. The parties agreed that employers must provide rest breaks to agricultural employees, that agricultural employees are entitled to some form of payment for those breaks, and that to answer the question, the court must interpret WAC 296-131-020. Although the Department of Labor and Industries adopted that regulation in 1990, in 25 years no Washington court has defined its scope or applied it to workers paid by piece rate.

“On the employer’s time.” As an initial matter, the state high court examined the plain language of the regulation. The plain and ordinary meaning of the phrase “on the employer’s time” clearly indicated that employers must pay agricultural employees during their 10-minute breaks. And when applied to pieceworkers, the only reasonable interpretation is that “on the employer’s time” requires pay separate from the piece rate. Since the piece rate is earned only while the employee is working, the workers’ rest breaks cannot reasonably be said to be “on the employer’s time” if paid by the piece. The only way to give meaning to the phrase in this context is to require compensation separate from the piece rate for rest breaks.

The Department expressly patterned WAC 296-131-020(2)’s rest break provision for agricultural employees on WAC 296-126-092(4). The Washington high court first interpreted WAC 296-126-092(4) and “on the employer’s time” in Wingert v. Yellow Freight Systems, Inc., which applied the regulation to a collective bargaining agreement that provided a 15-minute break after two hours of overtime work.

The court held that WAC 296-126-092 prohibited employees from working three hours uninterrupted without a break, even if the employee was receiving overtime pay and notwithstanding a conflicting break provision in the employees’ collective bargaining agreement. The employer’s alternate accommodation – overtime pay and a different break schedule – was not a substitute for the policy advanced by the rest break regulation, namely that “employees [are] afforded healthy working conditions and adequate wages.” Any practice that “decrease[s] the frequency of worker’s rest periods … thwart[s] that fundamental purpose.” Although Wingert and subsequent cases applied to rest breaks paid “on the employer’s time” to hourly workers, they guided the analysis here.

Observing that rest breaks are critical to the health and effectiveness of employees, that agriculture is one of the most dangerous industries, that rest breaks mitigate those dangers by allowing employees to cool down and rehydrate, and that payment schemes that encourage missed rest breaks at the expense of employee health have been rejected, the high court concluded that those principles support interpreting “on the employer’s time” in WAC 296-131-020(2) to require rest break pay separate from the piece rate. Thus, the court answered the first certified question yes.

Second certified question. The Washington high court next turned to the federal district court’s second question concerning how “Washington agricultural employers calculate the rate of pay for the rest break time” for pieceworkers. While the employees argued for the employee’s average piece-rate earnings, the employer argued Washington law requires only the minimum wage per hour for pieceworkers. WAC 296-131-020(2) is silent about the rate of pay required for employee rest breaks, whether paid by the piece or otherwise.

Here, the court noted that the MWA “sets the floor below which the agreed rate cannot fall without violating the statute.” However, a pieceworker’s right to separate pay for rest breaks springs not from the MWA, but rather from WAC 296-131-020(2)’s mandate that rest breaks be paid “on the employer’s time.” Under WAC 296-126-092(4), all hours worked contribute equally to the employee’s right to a rest break, and there is no basis to treat the rate paid for rest breaks “on the employer’s time” differently from the rate paid for other hours worked.

Nothing in WAC 296-131-020(2) suggests “on the employer’s time” means something different to agricultural workers generally or to pieceworkers specifically. Time spent on rest breaks and time spent in active work are both hours worked for the employer and, under the second sentence of WAC 296-131-020(2), are paid at the same rate (the minimum wage). Here, the high court found no reason to depart from this interpretation when a pieceworker’s average earnings are more than the minimum wage.

Because all hours worked “on the employer’s time” are treated equally, the state court held that WAC 296-131-020(2) entitles pieceworkers to their regular rate of pay for rest break time. To calculate a pieceworker’s regular rate, employers tally the total piece-rate earnings and divide those earnings by the hours the pieceworker worked, but here the divisor excludes time spent resting. Missed breaks also must be compensated at the pieceworker’s regular rate. Thus, the Washington high court answered the second certified question: WAC 296-131-020(2) requires that rest break time be compensated at the pieceworker’s regular rate of pay. (Demetrio v. Sakuma Brothers Farms, Inc., July 16, 2015, Yu, M.)

For more information on this and other topics, consult the Visit our News Library.