Beyond traditional salaried and hourly work frameworks, millions of people are paid every day in units other than time. For truck drivers, miles become a key input to pay. For agricultural workers, pay might be based on the amount of food harvested. To accurately pay workers in these industries, payroll platforms have to offer ways to pay a piece rate—i.e., to pay employees on a per unit basis for every project completed.
That’s why we’re excited to offer Piece Rate Pay on the Check platform. This new feature will enable our partners to support new segments of their customer base with accurate and timely payouts.
Piece Rate Pay. What it is, and how it works.
Piece Rate Pay is based on a rate per unit of output, rather than an hourly rate. These “pieces” could be items such as miles covered by a truck driver, necklaces produced by a jeweler, or repairs done by a plumber. Piecework is especially common in agriculture, call centers, home services, manufacturing, transportation, and similar industries.
For these businesses, attempting to use hours to approximate work that should be measured by piece rate can cause compliance issues. Using the wrong earning codes, for example, would result in out-of-compliance pay stubs with inflated hours worked that do not accurately show the piece rates. In some states, this approach may even cause the employees to be taxed incorrectly.
Regardless of the industry, all Fair Labor Standards Act (FLSA) rules still have to be considered, such as ensuring the total earned wages still follows minimum wage requirements or ensuring overtime is paid correctly. Additionally, some states require piecework employees to be paid for breaks or when there is no work. This requires special system configurations to account for ‘rest and recovery’ time and ‘non-productive’ time.
Check’s new earning types make it easy to manage all of this information via API, and ensure payroll calculations are made accurately. Using these earning types will help ensure that the employees are appropriately taxed in Check’s system. This information is then automatically documented into each employee pay stub.
Easily calculate Piece Rate Pay through Check.
Let’s walk through an example of how Piece Rate Pay is calculated.
Our worker, John, earns $0.50 per shirt produced. In his 40-hour work week, he attended a safety meeting (non-productive time) for 3 hours and had a total of 5 hours of breaks. In the same work week, the employee produced 400 shirts in 32 hours.
The total piece-rate earnings are $200 for the week, or $200/32hrs = $6.25 an hour. This, however, does not meet the federal minimum wage of $7.25/hr, so the employer needs to pay an additional $32 ($1.00 * 32) on top of the piecework pay.
Here’s a diagram that breaks the calculation down:
Piece Rate Pay unlocks new worker types for our partners
Check Piece Rate Pay makes it easy to help ensure that piece rate workers are paid with accurate pay stubs, no matter where they work. We’re excited for the new use cases that piece rate support unlocks for our partners and the customers they serve.
If you’d like to learn more about partnering with Check, please reach out!