A **piece-rate (or piecework)** employee is paid a fixed wage per item produced or action completed (e.g. picking a bucket of fruit, sewing a garment, assembling a computer component) rather than a standard hourly rate.
Under the **Fair Labor Standards Act (FLSA)**, piecework employees are **not exempt** from overtime. If they work more than 40 hours in a single workweek, they are legally entitled to receive overtime pay.
The standard and most common method approved by the Department of Labor requires translating piecework earnings into an hourly regular rate for the week:
Step-by-Step Math (Using 200 pieces × $4.00 rate in 48 hours):
1. Calculate Straight-Time Earnings: Multiply pieces produced by the rate per piece.
• Piecework Earnings = 200 pieces × $4.00 = **$800.00**.
2. Calculate Regular Hourly Rate: Divide straight-time earnings by total hours worked (including overtime hours).
• Regular Rate = $800.00 ÷ 48 hours = **$16.67 per hour**.
3. Calculate Half-Time Premium Rate: Multiply regular rate by 0.5.
• Premium Rate = $16.67 × 0.5 = **$8.33 per hour**.
• *Why 0.5x?* Because the straight-time pay (1.0x) for the pieces made during the 8 overtime hours is already included in your $800 straight-time earnings. Thus, only the **additional 0.5x premium** is owed!
4. Calculate Overtime Premium Earnings: Multiply premium rate by overtime hours.
• Overtime Premium Pay = 8 overtime hours × $8.33 = **$66.67**.
5. Calculate Total Weekly Gross Pay: Add straight-time earnings to overtime premium earnings.
• Total Gross Pay = $800.00 + $66.67 = **$866.67**.
As an alternative under FLSA Section 7(g)(1), if an employer and employee agree **prior** to the performance of work, they can use the **Overtime Piece-Rate Method**. Under this method, the employer simply pays **1.5 times the regular piece-rate** for all pieces produced during overtime hours.
For example, if you make 10 pieces during your overtime shifts, you are paid **$6.00 per piece** ($4.00 × 1.5) for those 10 items, plus your regular $4.00 for the other pieces.