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FOH Field Operations Handbook
Chapter 64 Employment of Workers with Disabilities at Special Minimum Wages under Section 14(c)
Section 64g Issues Requiring Special Attention

Section 64g06: Time Studies and Jobs Paid Piece Rate

  • General
    1. If a prevailing wage survey finds that a piece rate prevails for the kind of work to be performed by the worker with a disability, there would be no need to conduct a time study for that job. The worker with a disability should be paid the same piece rate established by the prevailing wage survey. A piece rate fixes a wage payment on each completed unit of work. When the worker with a disability is to perform a production job, the simplest and most objective method of payment is by piece rate.
    2. If the prevailing wage survey indicates that an hourly rate prevails for the kind of work performed by the worker who does not have a disability, and the section 14(c) employer wishes to pay a piece rate, time studies would be required to convert the hourly rate to a piece rate. See FOH 64g07 and 64j for guidance on computing hourly commensurate wage rates.
  • Time studies.
    1. In order to compute a commensurate wage rate, employers must determine how long it takes the "standard setter" (the average, experienced worker who does not have a disability) to perform the job. This is normally done by conducting time studies.
    2. Time studies are normally conducted using staff members of the facility (individuals without disabilities for the work) who have been given sufficient time to practice and prepare.
    3. WH does not require facilities to use one specific work measurement method, nor does WH prescribe the format or length of the time study. However, the facility must demonstrate to WH that the method is generally accepted by industrial engineers and that it was done accurately (see Regulations 29 CFR Part 525.12(h)(1)). There are several acceptable methods that an employer may use for establishing piece rates. Any time study method used to establish piece rates must be verifiable. This section (FOH 64g06) contains procedures that workshops typically follow in conducting stop watch time studies. These may be used by an INV to verify the results of an existing time study or to conduct a confirming time study.
    4. The methods used to establish the average hourly production of the standard setter may range from relatively simple techniques involving rudimentary counting of job samples over a fixed period of time, to sophisticated industrial engineering techniques like MTM and MODAPTS, discussed above. An example of one method that is acceptable to WH is a 25 minute stop watch time study observing three workers who do not have disabilities.
    5. During investigations, INVs will normally conduct (or oversee the employer conduct) time studies, either to verify the accuracy of the employer's time studies or because the employer has failed to conduct the necessary studies.
    6. See FOH 64i00(c) for a detailed description on how to conduct time studies.
  • Criteria for accurate time studies.
    1. As mentioned, the productivity of workers who do not have disabilities is measured by time studies.
      • 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)).
      • The subject of the time study should be permitted to practice the work until he or she is comfortable and can perform without hesitation. Employers wishing to establish piece rates are required by Regulations 29 CFR Part 525.12(h)(2)(ii) to make an allowance for personal time, fatigue, and unavoidable delays (PF&D). This allowance is discussed in FOH 64i01.
    2. Subjects being time studied should use the same work methods as those used by the majority of workers with disabilities.
      • The INV may find that job modifications, such as the use of jigs and fixtures, have been made to accommodate the special needs of a worker. If these modifications increase the productivity of the worker with a disability, but would impede a worker without a disability, no additional time studies are required (see Regulations 29 CFR Part 525.12(h)(2)(iii)).
      • However, an additional time study will be required when entirely different methods of production are used (as opposed to the modification of the existing method), or when a worker does not have access to certain equipment.
        Example: An employer has five production machines and 10 full-time employees who have disabilities that adversely impact the work being performed. If the production standard was established using machines, an additional time study is required because at least five of the workers must perform the job manually at any given time. Producing materials by hand is a completely different production method than producing materials by machine.
    3. The time study should include all operations of the job to be performed by the worker with a disability, such as set-up activities, packaging, counting, boxing, and irregular operations like retrieving supplies.
    4. When employees work on a contract, they must use the same methods and materials that were used during the time study. Any change would require another time study.
    5. If the time study method used by the facility appears to be unsound, the facility should redo the time study with INV oversight to demonstrate to WH that the method was accurate. For example, if a facility used a 10-minute time study and the pace of work maintained during the time study, when contrasted with the pace of workers "on the floor" appears unrealistic and unsustainable throughout the workday, the facility must redo the time study. The duration of the new study would have to be long enough to demonstrate that the pace of the 10-minute study could be maintained for an entire work shift.
  • There are certain distinct differences in the time study procedures depending on whether the employer wishes to pay a piece rate or an hourly rate to the worker with a disability. The procedures to follow for time studies are explained in detail in FOH 64i for piece rates and FOH 64j for hourly wages. Some of the similarities and differences between the two types of time studies are discussed below:
    1. Similarities.
      • Both require an accurate description of the work to be performed, including a task analysis detailing the method(s) actually used by employees when performing the job, the materials and any equipment required.
      • Both require the selection of an individual who does not have a disability for the work to be performed (the standard setter) who is familiar with the work and capable of maintaining a consistent, efficient pace.
      • Both require that a time study be conducted of the individuals who do not have disabilities for the task performing the same tasks that the worker with a disability will be employed to perform.
      • Both require consideration of quantity and quality of production.
    2. Differences
      • Who is time studied and who is evaluated:

        Piece rate:

        Time study the worker who does not have a disability to set piece rate for workers with disabilities. The worker with a disability is not observed/evaluated.

        Hourly rate:

        Time study the worker who does not have a disability to establish the standard against which the worker with a disability is then observed/evaluated.

      • PF&D consideration:

        Piece rate:

        Required when setting piece rate.

        Hourly rate:

        Not required when setting hourly rate, but INV may encounter situations where employer includes a PF&D when determining hourly commensurate wages. If PF&D is used in the evaluation of the worker with a disability, it must also be used when conducting the time study of the standard setter(s). It is important to remember that evaluations are not to be conducted if the worker is fatigued or subject to conditions that would lower productivity.

      • Quality of work:

        Piece rate:

        Quality standards - determining what is an acceptable, non-defective product - are established prior to conducting the time study. The standards setter (during the time study) and the worker with a disability (during actual production) must be held to the same standards of quality/product acceptance.

        Hourly rate:

        Employers must hold both the standard setter and the worker with a disability to the same standard of quality. Counting rework time the same for both is one way of doing this provided the same methodology is used for both. Otherwise quality must be considered separately. Methods that employers have used to do this are the inclusion of "rework" (see FOH 64j02(b)(1)) and the 90/10 rating (see FOH 64j02(b)(2)).

    3. To determine the adequacy of the time study methodology used by a facility under investigation, the INV should conduct (or observe the employer conduct) confirming time studies on two or three of the facility's larger on-going contracts (also, see FOH 64i00(d)(4) below).
    4. Indicators of an accurate piece-rate commensurate wage rate:
      1. One way to test the accuracy of an employer's commensurate wage rate is to multiply the employer's piece rate by the standard setter's expected productivity. This must equal at least the prevailing wage. Note that WH will not normally question computations that are carried out to the fifth decimal point and then rounded up to four decimal places. The employer could, of course round up (but not merely round off) sooner. For example, .04874 should be rounded to .0488 or .05. The reason for this practice is demonstrated in the following example:
        • The prevailing wage rate (PWR) is $6.65.
        • The standard setter produces 324 units in a 50-minute hour (this takes into account an adequate PF&D allowance as required by Regulations 29 CFR Part 525.12(h)(2)(ii) and FOH 64i01). Note: any partially completed units produced during the time study are not included when computing the standard. Only whole, completed units are counted.
        • $6.65 divided by 324 equals .0205246 per piece.
        • This piece rate is rounded up at the fourth decimal, to a rate of .0206 per piece.
        • The piece rate (.0206) is then multiplied by 324 units per hour to obtain the hourly rate of $6.6744, a rate which is not less that the prevailing wage of $6.65.
      2. However, consider the consequence to the worker with a disability if the employer had not carried the piece rate to at least five decimals and then rounded up at the fourth decimal. For example, if the above employer had rounded the rate to .02 per piece, the resulting hourly rate would have been approximately 17 cents below the prevailing wage of $6.65 (.02 per piece times 324 units per hour equals only $6.48 per hour). This means the worker with the disability would have to perform better than the worker who does not have a disability in order to earn the same prevailing wage.
      3. Thus the differences in rounding procedures, which to some employers seem so unimportant, actually have a significant effect on the wages of the worker with a disability. The worker who has a disability for the job being performed may be paid the exact commensurate wage or may be paid more than the commensurate wage - but may not be paid less than the commensurate wage. By carrying the piece rate out to the fifth decimal and then rounding up, the employer ensures the worker being paid the SMW receives at least the required commensurate wage.
      4. Note: Numbers displayed on a computer screen may not reflect actual amounts used by the computer in making calculations. Calculations done on spreadsheets should be verified by calculator computations using 5 decimal places and then rounding up to 4 decimal places. The employer has the burden of paying not less than the commensurate wage and must demonstrate by obvious calculation that he or she has done so.
      5. Another indicator of an accurate piece rate would be when the number of units the standard-setter has to produce (at the established piece rate) to earn the prevailing wage represents a reasonable amount - not an unrealistic expectation.
      6. A third indicator of an accurate piece rate would be when piece rates have been increased in the past year on contracts that have been continuously worked and are older than one year. This most likely indicates that the annual prevailing wage review has been conducted and proper piece rate adjustments have been made.
      7. Finally, an indicator of an accurate piece rate would be when an adequate PF&D allowance was incorporated into the time study used to establish piece rates.
    5. More detailed information on PF&D allowances and the conducting of time studies when an employer wishes to pay workers with disabilities a piece rate may be found in FOH 64i.
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