Carlsbad, California – April 9, 2013. A California Appellate Court recently held that the manner in which automotive service and repair technicians are paid must change.
For years, much of the automotive repair and service industry has relied on a consistent method of paying technicians – they pay for work actually performed. To do this, the industry has used a flat rate, piece rate, or flag system. This system works by designating a certain value, or flat rate number of hours, for each automotive repair or service task. Whether the task requires the entire amount of time allotted, or something less, the technician gets paid the simple, flat rate. Technicians are not paid for time spent between tasks, or the time spent waiting for jobs to roll in. This system has fostered efficiency on the part of technicians, and has allowed businesses to better manage their revenue flows. As of April 2, 2013, however, the system collided with the California labor laws, requiring an expensive repair.
A. New Law
In Gonzalez v. Downtown LA Motors, a Los Angeles dealership and service center was sued by its service technicians. The technicians claimed that the dealership failed to pay wages for time the technicians were required to be on the job, but were not performing repair or maintenance tasks (for example, waiting on site for the next job). The technicians argued that they were entitled to be paid for “each and every” hour they were on the job, not just for time spent performing piece-rate work. The dealership disagreed. It argued that piece rate pay was high enough to make the average hourly wage earned by a technician exceed the minimum wage. The dealership also stated that when piece rate wages did not exceed minimum wage in a given pay period, the dealership paid the difference to the technician. The Court agreed with the technicians.
Accordingly, automotive service and repair technicians are entitled to receive separate hourly compensation for time spent waiting for work, or performing other non-repair tasks. This means that if a technician is required to remain on site, ready to perform service or repair work on the next job that comes in, the technician must be paid for that time. If this has not been the past practices, the business could be liable for past wages and penalties. A lawyer should be consulted.
B. How to React
What does this mean for businesses that employ repair and service technicians? If you require technicians to stay at the repair or service facility between jobs, install a system to track those hours. Have your technicians log the time it takes for them to complete every job, and keep track of the hours that the technicians are not performing piece-rate work. If the technicians are required to stay ready for the next job, they will need to be paid at least minimum wage for the time waiting or performing non-service/repair work. If you do not require technicians to remain at the repair or service facility between jobs, the Gonzalez case does not make any changes to existing wage and hour law.
It is important to note that the Gonzalez case does not involve technicians who are required to use their own tools for automotive work, and therefore does not discuss how the requirement to pay such workers twice the minimum wage may be affected. What Gonzalez does say, however, is that technicians are required to be paid “separate hourly compensation for time spent waiting for repair work or other non-repair tasks.” This suggests that when a technician is not performing tasks for which they are required to use their own tools, the technician may be paid at a rate not less than the minimum wage, rather than twice the minimum wage.
Meyers | Fozi, LLP specializes in employment law, and routinely advises clients on issues that affect their day-to-day business. To learn more about the attorneys at Meyers | Fozi, LLP, and how they can assist you or your business, please feel free to contact Jeremy Dwork by telephone at 760-444-0039 or by email at [email protected].