In yet another blow to agricultural employers, grab your stopwatches. In Carranza v. Dovex Fruit Co., the Washington Supreme Court has just held that agricultural employers are required to compensate piece-rate workers on a separate hourly basis for time spent performing tasks outside the specific scope of the piece-rate work.
In a narrow 5-4 majority, the Court concluded that the time spent performing tasks outside of piece-rate picking work must be compensated on an hourly basis. The Court then went on to further hold that tasks outside the scope of “piece-rate picking work must be paid at the minimum wage or a contractually agreed rate, whichever is higher.
The Court rested its opinion on an interpretation of the state Minimum Wage Act (“MWA”) that requires employee compensation “‘at a rate of not less than [the applicable minimum wage] per hour.’” In doing so, the Court rejected the long-standing application of the MWA that allowed flexible compensation systems so long as employees were paid above the minimum wage for all hours worked in a week. The Court concluded that the regulations that expressly permitted what it referred to as “workweek averaging” were not applicable to agricultural workers. Thus, the Court was explicit that its holding in Carranza was limited to agricultural employment.
Agricultural employers can take some small solace from the fact that the Carranza decision was made by a narrow majority, and generated unusually sharp language between the majority and the two dissenting opinions; that is rare for the usually ideologically homogenous Washington Supreme Court, and portends that future developments may be better for agricultural employers. For now, though, the bottom line for Washington farmers is that “agricultural workers may be paid on a piece-rate basis only for the hours in which they are engaged in piece-rate picking work. Time spent performing activities outside the scope of piece-rate picking work must be compensated on a separate hourly basis.”
In addition to upending traditional compensation systems that were popular with both farmers and their employees, the Carranza decision leaves many important questions unanswered. Critically, the Court refused to address which tasks fall outside the scope of piece-rate work , and which tasks must be compensated on an hourly basis. The Court indicated this was a factual question, but the contentions of the parties illustrate the fine lines that must be drawn. For example, the Carranza plaintiffs acknowledged that moving a ladder between trees in the field was within the scope of piece-rate work, but moving a ladder from the truck to the field was not.
On a going forward basis, the Court acknowledged that farmers and their employees can enter into agreements setting the hourly rate applicable to the non-piece rate time, so long as that time is greater than the minimum wage. The Court offered no guidance, however, for how its decision in Carranza would be applied on a retroactive basis.
Carranza may lead to sweeping changes for how agriculture uses a piece-rate payment system, much to the dismay of employers. While we await a ruling from the trial court on what tasks are and are not piece-rate work, every farmer or other agricultural employer would be well-advised to reach out to counsel and update their compensation systems to keep ahead of the impacts of this decision.