Appeals Court Ruling On Piece Rate Pay Will Stay

The California Supreme Court has declined to review an appeals court’s decision in a case that set auto-mechanics and dealerships against each other. On April 2, the Second Appellate District found that Mercedes-Benz dealerships had broken minimum wage laws by averaging pay out, rather than paying workers for all hours worked. The case came following accusations that dealerships were acting illegally by not paying mechanics for time spent waiting during shifts.

The dealerships’ method of averaging pay for any workers who failed to meet minimum wage requirements was not enough to get around the fact that mechanics worked unpaid hours.

With the Supreme Court’s refusal to review the ruling, the law looks set to stick.

The dealership in question, Downtown La Motors LP, had asked the court to review the case. It argued that it was not required to pay hourly wages as, should mechanics’ pay not meet minimum wage requirements, workers were compensated until this minimum amount was met. The dealership also pointed out that the hourly rate for time worked was in fact substantially higher than minimum wage. The Second District had not previously agreed with this – siding instead with a Fourth District ruling that pay averaging violated the law, and that hours spent without pay are illegal.

The dealerships’ method of averaging pay for any workers who failed to meet minimum wage requirements was not enough to get around the fact that mechanics worked unpaid hours, the appeals court found. The court rejected the defendant’s arguments that previous rulings applied to hourly workers and not piece-rate workers.

With the Supreme Court’s decision not to hear the case, the appeals court’s award of $1.3 million to the technician class, along with more than $230,000 in penalties, stands.

Attorneys for the dealership warned that this case, a first impression in California, sets a dangerous precedent that could encourage employers to lower wages rather than maintain higher rates for time spent working. They also suggested that this ruling sets California apart from other states in terms of compensation systems.