This real life case study is presented by Carlos Becerra, making his blogging debut. The facts have been changed to protect the anonymity of those who prefer anonymity.

In June 2010, Ms. Glamour, a highly capable stylist, began working for HONEY-DO, a salon in Beverly Hills, as a receptionist earning $10 per hour. A month later, HONEY DO promoted Ms. Glamour to work as a stylist and paid her on a "piece-rate" basis. Whatever customers paid HONEY-DO for treatments by Ms. Glamour, she received 30%. But she was not paid for the "down time" between treatments, and was not allowed to leave the shop between appointments, in case a "walk-in" wanted a treatment.

A few years later, Ms. Glamour, despite averaging over $50 per hour, complained to the owner about not being paid for her down time. The owner balked at the complaint and said that HONEY-DO simply couldn't afford to pay her for hours that could not be credited to a client.

That's what the owner said. Here's what the law says: On-call or standby time at a job site is considered hours worked that must be compensated even if the employee does nothing but wait for something to happen.  According to Armour & Co. v. Wantock,  "an employer, if he chooses, may hire a man to do nothing or to do nothing but wait for something to happen." Employers who pay their employees on a "piece-rate" basis must pay them a separate hourly minimum wage for time spent on tasks unrelated to their primary work, even when an employee's total compensation for a pay period does not fall below the minimum wage. (As we've recently discussed,  even sleeping employees may be entitled to payment.) 

So guess what happened? Ms. Glamour hired a lawyer, who happened to be one of HONEY-DO's loud-mouthed clients and the lawyer sent HONEY-DO a scathing demand letter.  Facing an expensive uphill legal battle, HONEY-DO ended up paying a five-figure settlement. Ms. Glamour later opened up her own salon.

Takeaways:

If you're a CA employer who pays employees on a "piece-rate" basis and the employees have downtime, get qualified legal advice immediately. Steps employers should take include:

  • Implementing a policy defining and setting the rate of pay for non-productive work time and making sure that employees know the policy.
  • Ensuring that itemized wage statements contain a line item for non-productive work time and the rate it's being paid at to comply with Labor Code Section 226.
  • Conducting regular audits of daily time sheets, payroll data and wage statements to confirm that employees are being paid all wages, reporting time pay, standby time, non-productive work time and overtime.

Remember, a single wage and hour violation can be worse than a whole string of bad hair days.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.