What does it mean to be paid a “piece rate”?
While working on this season of “The Uncertain Hour,” we heard a lot of words and phrases that sounded weird to our ears. So each week we’re going to explain a bit of jargon. To get a new “Uncertain Term” in your inbox, subscribe to our newsletter! To go with our fifth episode, this week’s Uncertain Term is “piece rate.”
Many businesses pay workers a “piece rate” — a given dollar amount per task. Garment-factory workers might get a set rate for each article of clothing they sew. Some gig workers get paid by the job they pick up through an app. Jimmy Nicks, the chicken catcher we spoke to for this episode, usually took home a few dollars for every 1,000 chickens his team brought in each night.
Legally, anyone who’s paid a piece rate must still make at least minimum wage. And companies are expected to have done the calculation: The worker’s total pay for however many pieces they completed, divided by the number of hours they worked, should come out to at least the local minimum wage. If it doesn’t, the company can be sued or fined up to $1,000 per violation.
The Wage and Hour Division within the U.S. Labor Department is tasked with enforcing those rules. But the chances are slim that any given company would be investigated. David Weil, the division head under the Obama administration, told us during his tenure, there were only about 1,000 federal inspectors keeping tabs on more than 7 million workplaces nationwide.
Even when a third party firm — like a staffing company or subcontractor — does face investigations and fines, it might just shut down and reconstitute as a new company with a new name, and go back to subcontracting for the same big clients and violating the same laws.
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