Is Piecework Legal?
At the GIE show I had a lot of questions about piecework. With more employment laws changing it seems like this is a great time to cover the legal aspects of it. While I am not a legal professional, and can’t give you direct legal advice. I can let you know what I have found out about it.
There is a particular section under the FLSA (click here to see it) that applies to most service based lawn care businesses. Section 7 covers “Employees paid by Retail or Service Establishments.” Basically the fact sheet says that in order to use this exemption you need to meet 3 qualifications.
The three requirements
- It must be a retail or service based business.
- The employees rate of pay must be at least 1.5 times the applicable minimum wage.
- More than half must consist of commission (percentage of work done/sold).
Most lawn maintenance businesses are service businesses, so they fit under that heading.
For the second requirement you need to check with your particular states minimum wage requirements (States may have higher minimum wage requirements than the Federal one). As an example the current federal minimum wage is 7.50, so your workers need to make at least 11.25 (7.50 * 1.5) per clock hour that they are working for you. If they make less than that you will need to either pay them extra, or start paying them straight hourly + overtime.
Under number 3 If you are paying piecework then you meet the third requirement because you are paying 100% commisisons based. If you have an employee that does some office work at hourly rate, and some piecework than you will need to make sure that they are getting more of their pay from the piecework pay.
For more information on implementing piecework checkout this book on Amazon.
One company went to court over their comissions based pay, and won the court case because of section 7. They claimed that they were a service company, and that the employee was paid based on commissions (completing training with customers). The court agreed, and their “piecework” pay was upheld as legal. You can read more about the specific’s here. Let me know if you have any questions!