The Facts:

Downtown LA Motors, LP, a Mercedes-Benz dealership (employer) compensated its technicians on a piece-rate basis, which means that techs were paid a set amount for each repair completed based on a formula for each job performed.  Each job is given a "flat rate" which is determined by the industry depending on how many "flag hours" the completed job is worth. The techs accrue flag hours only when working on a repair order.  The employer paid techs a flat rate ranging from $17 to $32 for each "flag hour".  The employer calculated tech pay for an 80-hour period by multiplying flag hours accrued by the applicable flat rate.  Each tech kept track of all the clock time spent at the job-site by clocking in and out at the beginning and end of shift, and clocking out for meal breaks. If a techs piece rate compensation fell short of the applicable minimum wage for all hours worked, the employer would pay the difference.

Basis of Lawsuit:

The technicians (class of 108 service techs) contended that there frequently was not enough work to do and they had to remain at the dealership when this happened. The did not flag any hours when waiting for repair jobs, but were expected to perform various non-repair tasks, such as obtaining parts, cleaning their stations, attending meetings, traveling to other locations to pick up and return cars, reviewing service bulletins, and participating in on-line training. The techs filed a class action lawsuit claiming that the employer violated California Law by not paying techs a minimum wage during the "waiting time" (or time spent on the clock engaged in non-piece work).  The trial court ruled in favor of the technicians, holding that California law requires the Employer to pay the techs for their waiting time between repair orders.

The Appeals court affirmed the trial court judgment and concluded that the technicians were entitled to separate hourly compensation for time spent waiting for repair work or performing other non-repair tasks directed by the employer during their work shifts.

It is still undetermined whether this case will be appealed to the Supreme Court. Employment legal experts are trying to fully comprehend the ramifications and provide more clarification. But in the meantime to avoid risks, employers employing technicians compensated on a piece rate system should, if not already doing so, pay separate hourly compensation for "waiting time" or performing other non-repair tasks.