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Conducting Work Measurements of Jobs that will be Paid a Piece Rate Under FLSA Section 14(c)

A piece rate fixes a wage payment on each completed unit of work. When a worker with a disability is to perform a production job, the simplest and most objective method to ensure the payment of commensurate wages is the payment of a piece rate.

If the prevailing wage survey yielded a piece rate, and the employer of the workers with disabilities will be performing the job in the same manner as the survey firm(s), no additional work measurements need be performed.

But if the methods of production will differ, or if the prevailing wage yielded an hourly wage rate and the employer of the workers with disabilities prefers to pay a piece rate, a work measurement must be conducted that will yield a piece rate.

The following is a detailed description of the steps an employer should follow when conducting a time-based measurement (setting the standard) for a job that will be paid on a piece rate basis.

1. Develop job description.

  1. Define specific job duties, responsibilities and general tasks. It is important that the employer is able to demonstrate that the work for which the standard is established is the same as the work for which the worker with a disability will receive special minimum wages.
  2. Specify the types of equipment and materials to be used. The employer must be able to verify that the material and equipment used by the worker with the disability is the same as that used when the standard was established.
  3. List the types of skills, training or experience required.
  4. Indicate the days and times the work is performed if such factors could have an impact on the productivity of the worker.

2. Perform a task analysis.

  1. Identify the components, tasks and subtasks to be performed.
  2. Develop an accurate picture of the method and procedures used to accomplish the tasks.
  3. Include types of equipment and supplies to be used. Specify the area where the work will be performed.
  4. Determine a definite start and stop point. The entire job cycle must be timed, including all preliminary activities (set-up time) and all postliminary duties (stowing of materials and equipment) to be performed on the job by the worker with disabilities. The job cycle begins at a specific point, such as picking up the first piece in an assembly. It ends when that point is reached again. The employer must be able to verify that the clock was not stopped to accommodate irregular elements (like equipment failure or depletion of needed supplies), or, that if it was stopped while the worker with a disability repaired errors, it was also was stopped while the standard setter was timed.
  5. Ensure that when the worker with the disability performs the actual work, it is performed in the same way the standard setter performed the work when establishing the standard, or in a way that allows the worker with the disability to be more productive.

3. Choose the standard setter(s). Most frequently, this will be a staff member(s) or worker(s) who is:

  • Qualified to perform the task
  • Familiar, experienced, and comfortable with the work
  • Able to perform in a typical work environment
  • Able to maintain a consistent and efficient pace
  • Able to perform at or close to 100 percent productivity

4. Time the standard setter (the worker who does not have disabilities for the work being performed) performing the job.

  1. This procedure is known as setting the standard.
  2. The individual conducting the study (the observer) must:
  1. Use a generally recognized method of work measurement;
  2. Assure that the standard setter performs the task exactly as it will be assigned to the worker with the disability. Include irregular elements when they are part of the job such as depletion of supplies, counting of finished products, resetting of equipment or machinery, and wait time;
  3. Structure the study to avoid, as much as possible, “lost time” situations. Lost time is time excluded from a time study for an activity that is not a regularly recurring part of the job. Example: time lost when a supervisor acting as the standard setter is interrupted during the time study by an employee’s question;
  4. Compare the standard setter’s actions to the written procedures;
  5. Time the standard setter’s work using the same start and stop points as designated earlier;
  6. Read the stopwatch and make recordings nearly simultaneously;
  7. Document the measurement used to set the standard. It is important that the employer record the method used, date the standard was set, and the personnel involved in conducting the measurement to ensure the standard can be verified;
  8. Conduct the study three times and determine average units per hour;
  9. When possible, use three different people as standard setters. The performance of the individual being time studied should represent a normal productivity level. The standard setter should not work, or be encouraged to work, so fast that he or she could not maintain that pace over a work shift. If the standard setter's performance is above or below normal performance levels, adjustments (or "leveling") may be done to compensate, but only by someone knowledgeable in this technique, as evidenced by successful completion of training in this area (see Regulations 29 CFR Part 525.12(h)(2)(i));
  10. Conduct the study for a period long enough to ensure that the work pace may be sustained throughout the day. Many work centers conduct 25-minute time studies, although the U.S. Department of Labor Wage and Hour Division does not require a specific length. For most assembly jobs, 20 to 25 minutes is long enough to establish a valid production standard;
  11. Make an allowance for personal fatigue and delay (PF&D) (as required by Regulations 29 CFR Part 525.12(h)(2)(ii)). For more information about establishing a PF&D allowance, please read Fact Sheet 39D, Incorporating Personal Time, Fatigue and Delay (PF&D) Allowances When Determining Piece Rates to be Paid Workers with Disabilities Receiving Special Minimum Wages under Section 14(c) of the Fair Labor Standards Act (FLSA); and
  12. Use these results to set the piece rate. For example, if the “standard” was 200 envelopes stuffed per hour after allowing for an appropriate PF&D (the average number done by the workers who do not have disabilities) and the prevailing wage was $7.20, the piece rate would be $.036 per envelope ($7.20/200 = $.036).
  13. Always multiply the standard "units per hour" by the "piece rate" you established to ensure that the result equals or exceeds the full prevailing wage rate. If it does not, then the "rounding" used while determining the piece rate is most likely incorrect. Remember, when computing piece rates, always round up.

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FLSA Section 14(c) Advisor | Wage and Hour Division