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Washington Supreme Court Determines Call Center Employees Were Not Piece Rate Workers

During the past few years, the Washington Supreme Court has been presented with several wage and hour issues regarding what is considered compensable time and how such time should be calculated. In one recent decision, the Court reviewed whether a compensation plan, that paid employees per minute they were on a call from a customer, qualified as piece work under Washington law. Tiffany Hill v. Xerox Bus. Services, LLC, et al, 426 P.3d 703 (2018).

The issue arose in a putative class action filed by employees who worked at a Xerox call center in Federal Way. After the federal district court denied Xerox’s motion for summary judgment, the Ninth Circuit accepted an interlocutory appeal and then certified the case to the Washington Supreme Court to review “whether an employer’s payment plan, which includes as a metric an employee’s ‘production minutes,’ qualifies as a piecework plan under Washington Administrative Code Section 296-126-021.” Under this Section:

“Where employees are paid on a commission or piecework basis, wholly or partially, (1) The amount earned on such basis in each work-week period may be credited as a part of the total wage for that period; and (2) The total wages paid for such period shall be computed on the hours worked in that period resulting in no less than the applicable minimum wage rate.”

The Xerox employees were subject to an Achievement Based Compensation Plan by which they were paid for every minute on the phone with customers (and for certain associated tasks), which Xerox called “production minutes” (i.e., units of time rather than of tangible items such as bushels or pounds). Any other time (e.g., waiting for a call to come in, recording a time sheet, making outbound calls, or doing other types of work-related tasks), did not count as “production minutes.”

If an employee’s average hourly pay rate for the week was below minimum wage, Xerox would supplement the pay to ensure that the average hourly rate for the week met the minimum wage requirement. This “workweek averaging” approach is currently allowed for non-agricultural employees who are paid on a piecework basis, whereas such employees who are paid on an hourly basis must instead be paid at least minimum wage for each and every hour worked.

Xerox argued its plan was piece rate work because employees were paid a fixed amount for each “production minute” unit. The employees contended allowing employers to use a unit of time as a unit of work would permit them to circumvent the requirement an hourly employee be paid at least minimum wage for each and every hour worked.

The Washington Supreme Court agreed with the employees, reasoning that otherwise employers could pay their employees less than minimum wage for each hour worked simply by labeling some of the work time as “piece rate units.”

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