The characterization of compensation as either piece work or hourly forms the basis for a wage dispute between Hill and Xerox. Piece rate employees are paid a rate of pay for completing a certain task, for example, when an apple picker is paid for each bin of apples picked. An hourly employee is a person that is paid by the hour, and not paid for completing a task. If a person is paid by the hour, one must be paid at least minimum wage for each hour worked in the State of Washington. If a person is a piece rate employee, the employer may use workweek averaging to calculate minimum wage compliance. In workweek averaging, so long as the rate of pay is at or above minimum wage, some of the hours worked can be paid at a rate under minimum wage.
Xerox operates a call center in Federal Way, Washington. Xerox compensates its employees using its Achievement Based Compensation (“ABC”) plan. The ABC plan provides compensation based on the employee’s unique ABC rate of pay, the employee’s “production minutes” and the local minimum wage. A “production minute” is the time that an employee is on the phone resolving inbound customer calls or performing certain postcall work. “[P]roduction minutes” are not generated by waiting for a call, making outbound calls, reviewing workplace announcements, caring for workstations, logging on or off Xerox’s phone systems, or recording time sheets and work activities. The call center employees are not compensated separately for those non “production minutes,” unless the employee’s average hourly salary for the workweek goes below the applicable minimum wage.
Xerox applied workweek averaging to determine if they were in compliance with the Washington State minimum wage laws. Under Xerox’s workweek averaging, an employee’s high producing hours were used to offset their low producing hours, so that the minimum wage was made on a weekly basis.
“Washington has a long and proud history of being a pioneer in the protection of employee rights. This case and the rational for the Court’s decision should be kept in mind when looking at or considering wage and hour matters in the State of Washington.”
Washington’s Minimum Wage Act (“MWA”), chapter 49.46 RCW, permits workweek averaging to determine minimum wage compliance for commission or piece rate workers, but not for hourly workers. This being the case, the critical question here was: were these Xerox employees piece rate workers or hourly workers?
The Washington Department of Labor and Industries (“WDLI”) describes “[p]iece rate employees” as “usually paid a fixed amount per unit of work.” The WDLI does not say if minutes worked constitutes a “unit of work.” This Court agrees with Hill that to allow Xerox to use an employee’s clock time as a “unit of work” would allow employers to circumvent the MWA’s bar against workweek averaging, by simply classifying their employees’ otherwise hourly salaries as piece rate units. The Court noted that to rule otherwise would allow employers to pay their workers less than minimum wage for each hour worked by simply classifying portions of their employees’ work time as piece rate units.
Xerox v. Hill, Washington State Supreme Court, No. 94860-7, September 20, 2018