Is Piecework Legal?
The short answer is yes. The long answer is; it’s complicated.
With more employment laws changing it seems like this is a great time to cover the legal aspects of piecework.
I am not a legal professional, and can’t give you direct legal advice. I can, however, let you know what I’ve learned about it over the years.
There is a particular section under the FLSA that applies to most service-based lawn care businesses. Section 7 covers “Employees paid by Retail or Service Establishments.”
The fact sheet says that to use this exemption you need to meet three qualifications.
The Three Requirements For Keeping Piecework Legal
- It must be a retail or service based business.
- The employee’s 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).
Good news! Most lawn maintenance businesses are service businesses, so your business likely fits under that heading.
For the second item, 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.
If you’re paying piecework then you meet the third requirement because you are paying 100% commission based. If you have an employee that does some office work at an hourly rate, and some piecework than you will need to make sure that they are getting more of their pay from the piecework pay.
Back in 2005, one company went to court over their commission’s 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.