WA State Piece Rate Workers Must Be Compensated for Breaks

The WA Supreme Court decided on July 16, 2015 in Demetrio v. Sakuma Bros. Farms, Inc. that employers must pay piece rate workers for rest periods “separate and apart from the piece rate.”  Farm workers paid by the task are entitled to rest-break pay above the negotiated piece rate.  This ruling is the result of a portion of a class action lawsuit by Skagit County berry farm laborers in federal court, see a previous post here.

WA state regulations mandate that employers cover the cost of 10 minute rest breaks every four hours for all workers in all industries.

Given that apples are WA state’s most valuable crop and seasonal workers are most likely to be paid by piece rate, this ruling could add large extra labor costs for WA fruit growers.  Per the court’s decision, the employer must pay each piece rate worker for their rest periods in an amount equal to the greater of:

  • the minimum wage,
  • or the deemed hourly rate referred to as the “regular rate” calculated by taking the worker’s total weekly piece work earnings, divided by the hours worked by the worker during such period, excluding required break times (regardless of whether they are taken or not).

Example:  Worker’s total piece rate earnings for the week is $800.00 and worked for 40 hours, including the required two 10 minute rest-breaks each day (total of 10 required rest breaks in 5 days). Workers “regular rate” would be $800.00/(40 hours – 100 minutes of required rest-breaks), which equals approximately $20.87/hour, which is greater than the minimum wage rate. Therefore, in addition to the  piece work pay of $800.00, the worker would be entitled to be separately paid for the 100 minutes of required rest-breaks at such worker’s regular rate of $20.87/hour or approximately an additional $34.78 for the week.  Had the regular rate been less than the current minimum wage of $9.47/hour, the regular rate would be adjusted up to the minimum wage.

The court took no position on whether the ruling would be retroactive, so it is possible to see more claims for back wages and damages for up to three years.  Other potential issues include all other non-direct production activities such as walking from field to field, moving ladders or emptying apple bags.

What should you do?  First and foremost begin separately compensating all piece rate workers for rest-breaks as described above, not doing so will be a violation of wage and hour laws and will most likely result in claims and penalties.  Consideration should also be given to any retroactive application.  As mentioned above, the court did not give any consideration to this; however, if it is to be applied retroactively there may be a liability for past rest-break payments and could be as long as three years and also may include interest and penalties on the amounts owed.  It is important then to ensure all payroll records for the prior 3 years are preserved.

Washington state has the highest minimum wage (for a state) in the country and for those Ag workers earning piece rate wages, the effective minimum wage is now over $10 per hour.

David Enquist, CPA

  • Principal
  • CliftonLarsonAllen
  • Yakima, Washington
  • 509-823-2920

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

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