On July 16, 2015, the Washington Supreme Court issued a ruling interpreting the statutory requirement for agricultural employees to receive paid breaks as applied to those paid solely on a piece rate basis.

By law, employees in Washington are entitled to short rest breaks “on the employer’s time.” In the case of hourly employees, that means employers must pay the employees their regular hourly rate during these breaks. In other words, hourly employees remain “on the clock” during these breaks.

Piece rate employees, however, are paid at a rate tied directly to their production, not time or hours worked. Thus, as the Court observed in Demetrio v. Sakuma Bros. Farms, Inc., 2015 Wash. LEXIS 807 (Wash. July 16, 2015), “the clock stops during periods of inactivity however brief.”

In Demetrio, seasonal agricultural workers employed to harvest crops on a berry farm in Skagit County brought an action against the farm for unpaid wages, specifically their rest breaks. While this action was in Federal District Court, and the parties settled without admission of wrongdoing, Washington’s Supreme Court was asked to answer two certified questions:

Whether a Washington agricultural employer has an obligation under WAC 296-131-020(2) and/or the Washington Minimum Wage Act to separately pay piece rate workers for the rest breaks to which they are entitled; and if so, how must Washington agricultural employers calculate the rate of pay for the rest break time to which piece rate workers are entitled?

WAC 296-131-020(2) applies to agricultural employees, and provides:

Every employee shall be allowed a rest period of at least ten minutes, on the employer’s time, in each four-hour period of employment. For purposes of computing the minimum wage on a piecework basis, the time allotted an employee for rest periods shall be included in the number of hours for which the minimum wage must be paid.

In its analysis, the Court examined the language “on the employer’s time” specifically. In doing so, it held that the only reasonable interpretation is that “on the employer’s time” requires pay separate from the piece rate. Since the piece rate is earned only while the employee is working (i.e., no pay accrues during rest breaks) the employees’ rest breaks cannot reasonably be said to be “on the employer’s time” if paid by the piece. As such, piece rate employees were effectively financing their own breaks, in that they were forfeiting pay in order to take them. The Court further concluded that the only way to give meaning to the phrase “on the employer’s time” in this context is to require compensation separate from the piece rate for rest breaks.

In answering in the affirmative to the first certified question, the Court then turned to the second question: how is this separate rate of pay calculated for these piece rate employees?

Based on previous case law and policy behind payment during rest breaks, the Court rejected the notion that this separate pay should be based solely on minimum wage. It reasoned that because all hours worked “on the employer’s time” are treated equally, the WAC entitles pieceworkers to their regular rate of pay for rest break time. This regular rate of pay is calculated by tallying the total piece rate earnings and dividing those earnings by the hours the pieceworkers worked, excluding the time spent resting. This formula yields the average rate of pay pieceworkers earn during active production—their regular rate. It also prevents rest break time from being double counted. This method of calculation is devised to prevent employers from paying rest breaks at a lower rate than production, thus providing an incentive to employees to miss breaks.

While this analysis applies directly to agricultural piece rate workers, this ruling is a reminder that prudent employers may wish to examine their operations closely for practices or policies that incentivize employees to ignore or disregard rest breaks or other benefits provided by statute to employees, and the importance of staying up to date on the latest in labor laws and regulations.

This opinion is the latest of developments in the employment law field, and comes on the heels of a number of wage and hour updates. In the past year, increased minimum wage laws, a trend towards mandatory paid sick leave, and the Department of Labor’s proposed rule updating FLSA coverage for employees exempt from overtime are just a few of the many issues employers should be aware of. The lawyers at Ledger Square Law are dedicated to protecting your interests. Give us a call to discuss your wage and hour issues before they result in protracted and expensive litigation.