Datatech software has the ability to calculate Rest & Recovery rates based on either regular rate of pay or average hourly piecework rate. In Washington there was some confusion as to which method should be used because some of the documentation published used the term “regular rate of pay.” This is a term used by the US Wage & Hour Division and many states as a means of calculating overtime, sick pay, break rates, etc. and is typically a weighted average of all compensation divided by hours worked.
In one section of the WA Administrative Policy for break compensation (http://www.lni.wa.gov/WorkplaceRights/files/policies/esc62.pdf) it seems the same method of calculation would be used:
- How must employers compute the amount owed for rest periods for agricultural piecerate workers?
How much a worker must be paid for the rest period depends on whether the worker’s regular rate of pay—the average hourly rate of pay for the workweek not including rest periods—is above minimum wage.
To compute the amount owed for rest periods, the employer must first compute the worker’s regular rate of pay. This is done by dividing the total compensation earned in a workweek by the total active hours of work (the “total active hours of work” does not include the break time). The result is the regular rate of pay for the week.
However, in further review of these policies, they use the term regular rate of pay in reference to only piece-rate earnings. Further along in section 6 reads:
The following examples show how employers should calculate the worker’s “regular rate” of pay for the workweek.
First, add up the worker’s total piece-rate earnings for the workweek. Even if the worker earns different piece rates during the workweek, total all piece-rate earnings for the week. Next, divide those earnings by the worker’s active hours of work (exclude rest period time). This amount is the worker’s “regular rate” of pay.
Additionally, see section 8:
- Some employees alternate between piece-rate and an hourly rate of pay. How should the employer calculate the separate pay for the rest periods?
Rest periods for workers who alternate between piece-rate and hourly-rate wage arrangements must be paid according to their basis of pay at the time they take their rest period.
For example, If a worker takes a rest period while working at the hourly rate of pay, the employer is not required to pay separately for the rest period because the rest period has been paid “on the employer’s time.”
Based on this information we suggest Washington employers use the “Average Piece-Rate” selection on the Rest & Recovery and/or Batch Report as the method for calculation. This method only takes into consideration the piecework earnings and does not include any hourly wages in the calculation, per the answer to question 6 in the Administrative Policy document.
If you have payroll in both Washington and California, here are the key differences in how breaks are to be paid:
In California, if an employee has both piecework and hourly pay during a pay period, all breaks (including breaks taken while being paid on an hourly basis) must be paid at the employee’s regular rate of pay.
In Washington, breaks taken while earning hourly wages do not need to be paid at a different rate. Breaks taken while earning piecework wages must be paid separately at the average hourly piecework pay rate.
If you need further clarification or have additional questions please consult your legal counsel or the Washington State Dept. of Labor & Industries.