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"Pay Averaging" Post-Armenta – Revisiting the Prohibition Against "Averaging" Commissions and Piece Rates

This article challenges the logic and holdings of decisions from four California federal district courts and three California courts of appeal that have concluded that employers who pay non-exempt employees by commission or by piece rates may not average the wages earned over a day or week to determine compliance with state minimum wage law. Its goal is to encourage California federal and state courts to re-evaluate and modify these ‘‘pay averaging’’ decisions to hold that commissions and piece rates, if reasonably structured, compensate for all work time, including: (1) statutory rest periods; and (2) gaps between activities directly related to sales or earning pieces that are either of reasonable duration or closely related to direct sales or piece rate activities (‘‘gap time’’).

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