Jul 22, 2015

Take these steps to comply with the Washington piece-rate ruling

The Washington Supreme Court has ruled that piece-rate workers must be paid separately for their rest breaks, a decision that will have a significant impact on the way the state’s growers pay their employees.

Dan Fazio said such a ruling could have “catastrophic” consequences for Washington’s growers. Speaking before the ruling was made, the director of wafla, a services provider for farm employers in the Pacific Northwest, said that if the court changed the state’s piece-rate law retroactively, agricultural employers might have to pay for worker rest breaks going back three years.

The court’s July 16 decision did not cover the issue of retroactivity, but wafla expected attorneys to begin filing cases for workers asking for back pay, penalties and attorney fees for the past three years. According to the organization, the cost to the state’s agricultural industry could be in the “tens of millions.”

According to the court’s ruling, “pay for rest breaks separate from the piece rate … is consistent with Washington case law interpreting rest break regulations.”

But Adam Belzberg, a partner at Stoel Rives and the attorney for the defendant farmer, disagreed. He said the court “relied on the illogical belief – without any supporting evidence – that the inclusion of rest break pay within the piece rate somehow incentivizes employers to employ fewer workers, and fosters a culture of working through breaks. In reality, the court’s ruling will do nothing to protect these stated interests, and simply opens the door to a flood of litigation that will expand far beyond agriculture to include any Washington employer using a pure piece-rate or commission pay system.”

The court stated that the amount of extra pay should be paid at whatever the worker earned during piece rate. Wafla calculated that if the worker is paid $20 per bin and produced 40 bins in a 50-hour pay period, that worker is entitled to rest-break pay at $16 per hour. If the worker was required to take two breaks each day at 10 minutes each, the worker would be entitled to an extra $26.67 for rest breaks for that weekly pay period.

The legal dispute goes back to October 2013, when piece-rate berry pickers filed a lawsuit against Sakuma Brothers Farms in Burlington, Washington. The lawsuit claimed that Sakuma violated both federal and state worker protection rules, and included complaints about not being paid for time worked, not being paid the minimum wage, not getting rest breaks and poor working conditions, said Marc Cote, lead attorney for the plaintiffs.

The case went into mediation last year, where a settlement was reached on every claim but the one involving rest breaks. According to Washington state law, employers are required to provide their employees a 10-minute, paid rest break for every four hours worked. In the settlement talks, Sakuma agreed to provide rest breaks but not to pay for them, Cote said.

Both sides made oral arguments before the Washington Supreme Court in March. Belzberg, Sakuma’s attorney, argued that the claim that piece-rate workers are not being paid when they’re taking rest breaks is misleading. With piece-rate workers, or any other workers paid on a commission basis, it’s always been the case that the payment covers everything that goes into producing the piece. In the Sakuma case, the piece rate covers not only the act of picking the berry off the bush, but the time it takes to fill the bucket, separate the poor-quality fruit – and take a 10-minute rest break every four hours.

– Matt Milkovich

Steps to take to comply with the piece-rate ruling

According to Stokes Lawrence, a Washington-based law firm, employers should implement the following wage practices immediately.

Schedule rest breaks and ensure that employees take them. It is the employer’s obligation to make sure that rest breaks are taken. You should schedule your rest break times and enforce them. Document rest break times daily to avoid disputes. For practical purposes, rest breaks begin when the last worker either leaves the field or work area and end when the first person returns to the work area. Recommended practice: Require employees to confirm in writing that rest breaks were taken each pay period.

Rest breaks must be paid separately. You will need to add 10 minutes of extra pay for each rest break. Rest breaks are 10 minutes every four hours.

Rest breaks are paid at each employee’s applicable earned rate (not minimum wage). Rest breaks are paid based upon the individual piece rate earned per pay period on an employee-by-employee basis. Each employee will likely have a different rate, and those rates will change pay period to pay period.

Retroactivity (undetermined). The court expressly avoided determining whether the ruling applies retroactively. This issue will almost certainly be litigated at some time in the near future. That said, understand that retroactivity is overwhelmingly the norm, but the court does have discretion to make its decisions applicable on a go-forward-only basis to avoid harsh results. However, based on the fact that this was a unanimous decision and overwhelmingly in favor of employee rights, employers should expect lawsuits and should collect and preserve information regarding breaks and wages going back at least three years.

Q&A

To answer questions employers might be asking, wafla provided this Q&A.

Q: I can establish a similar compensation scheme using hourly pay and a bonus. Will this work?

We think so. If a farmer paid $10 per hour plus a $7.50 per-bin bonus, the worker who picked the same 40 bins in a 50-hour work week would receive the same $800 for the week, but in this case the farmer would not need to calculate extra pay for rest breaks. Unfortunately, workers prefer a straight piece-rate system, and therefore farmers face an uphill battle trying to explain how hourly plus a bonus achieves the same result.

Other than moving to hourly plus bonus, how can I comply?

In reading the court decision, it appears that employers must immediately begin paying extra for rest breaks on a per-payroll basis. Therefore, the most conservative strategy would be for employers to provide a bonus check, at each payday, which is equal to the number of rest breaks multiplied by 10 minutes per rest break (if that is the length of the break) multiplied by the combined hourly wage that was earned considering all hours and all wages for the period. We hope you have a good accountant or accounting program.

Workers signed an agreement wherein they understood that piece-rate earnings included rest breaks. Are these agreements valid?

Probably not. In one section of the opinion, the court stated that the rate at which piece rates are paid might be subject to voluntary bargaining, but other parts of the opinion state that piece-rate workers must be compensated for breaks at the applicable minimum wage or the employee’s regular rate, whichever is greater.

The regulation states that rest breaks “shall be allowed.” What if I allow a rest break and a worker chooses not to take it?

The court left no doubt that rest breaks are mandatory, stating: “It is not enough for an employer to simply schedule time throughout the day during which an employee can take a break if he or she chooses.” In the words of the court, “employers must affirmatively promote meaningful rest time.” If a worker chooses not to take a rest break the employer should consult with legal counsel and ultimately may impose disciplinary action.

I am an H-2A employer. My H-2A contract states that I will follow the Supreme Court decision. Now what?

Wafla is reaching out to H-2A employers to determine how to best follow the court’s advice within the confines of the H-2A program.