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Minimum wage vs flat rate California

On Lawyer & Legal » Employment & Labor Law

4,969 words with 3 Comments; publish: Tue, 22 Sep 2009 11:15:00 GMT; (80078.13, « »)

I have an automotive repair facility, we pay and hourly rate. Since they provide their own tools-we pay them x2 min. wage =16.00 hour

I would like to go Flat rate. However I am concerned about paying them for the time in the building -I know they have to be paid min. wage for the time they are here and not on a job. But do I have to pay them $8 and hour or $16. if they are getting Flat Rate Pay?

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    • What do you mean by flat rate?

      I also agree with DAW that it is unlikely that you would be allowed to pay those employees, who must provide their own tools, less than twice the minimum wage. I also would advise you to approach any on-call policy you impose on these employees carefully. If your policy is too restrictive, the on-call hours may be considered "hours worked", meaning they would have to be paid. You may want to research 47.4 thru of the DLSE Enforcement Manual. http://www.dir.ca.gov/dlse/Manual-Instructions.htm

      Also, check if there is any applicable opinion letters to better give you an understanding of what time is considered "hours worked".

      #1; Tue, 22 Sep 2009 20:54:00 GMT
    • Flat rate is a fairly common method use in auto repair. It means that instead of paying the exact time that there is a magic book that says replacing the transmission on a certain type of car should take XX hours. Sort of a standard rate based on what someone thinks that it should cost. This is often called "flag rate" in the auto repair business or piece rate in different industries.

      This method is not inherently illegal but it's major weakness is that it cannot make minimum wage or overtime rules go away. So basically the employer is required to not only track all hours worked, but do a two-step calculation. Once for the piece work (flat rate) number and a second time for the minimum wage number. Then the larger of the two numbers is used for the overtime calculation. More work then just using an hourly or salaried method. Plus arguably the auto repair industry has a bit of a history of using extremely complicated payment methods that their employees cannot understand.

      We seem to get a lot of flat rate (flag rate) questions from employees of auto repair employees on this website for some reason.

      #2; Wed, 23 Sep 2009 08:15:00 GMT
    • NOT my area of expertise, but I think that you are trying to make up a rule that does not actually exist. If you look at either the wage orders (industry specific regulations in CA) or the CA-DLSE, it says nothing about the twice minimum wage provision going away because the workers are hanging around doing nothing. Certainly you should consider contacting CA-DLSE for a better opinion.

      Past that, (IMO) the key is not the rate (which I am pretty sure that you are stuck with), but rather the hours worked. Federal law has some pretty ticky-tacky rules on "waiting to be engaged" versus "engaged to wait". I am not certain just how CA slices that particular baloney, not ever having a need to hard research this issue. I will say thought that having the employees on your premises is problematic. It seems that you either have to pay them $16/hr (at least) or nothing, depending on the hours worked rules. Going to Flat Rate or Piece Work or Sun Spot based rates does not change this.

      Is there any chance that you can tell people to leave when they are not working and to page them when you need them? The key here is the hours, not the rate. IMO, if you want to change the rate, you have to provide all tools needed, period.

      I am including a quote from the CA-DLSE manual. The first several cites are the standard federal law court cases that all FLSA related rules are based on. The last cite is CA specific.

      45.5.7 Tools. When tools or equipment are required by the employer or are necessary to the performance of a job, such tools and equipment shall be provided and maintained by the employer, except that an employee whose wages are at least two (2) times the minimum wage provided herein may be required to provide and maintain hand tools and equipment customarily required by the trade or craft. This subsection (B) shall not apply to apprentices regularly indentured under the State Division of Apprenticeship Standards.

      46.6.3 Time Spent Waiting: The DLSE enforcement policy has consistently held that hours for which an employee has been hired to do nothing or merely to wait for something to happen are hours subject to the control of the employer, and constitute hours worked. (Armour & Co. v. Wan tock (1944) 323 U.S. 126 ; Skidmore v. Swift (1944) 323 U.S. 134.) If, in the case of standby or on call status, the restrictions placed on the time of the employee are such that the employee is unable effectively to engage in private pursuits, the time is subject to the control of the employer and constitutes hours worked. (Madera Police Officers Association v. City of Madera (1984) 36 Cal. d 403) (O.L. 1998.12.28)

      #3; Tue, 22 Sep 2009 14:37:00 GMT