Paying medical professionals such as nurses, psychologists, or dental technicians, and testing technicians, a piece rate for work done is a recent trend in employment costs savings. I have especially seen employers use it for trainees or people who need to get a specific set of work hours for licensing requirements. This arrangement can be beneficial for both the trainee and the employer, especially when the employer would not normally be able to hire a trainee under a regular schedule. Medical billing practices may intersect with California law to make things a bit tricky.
A typical contract might involve an intern psychologist who gets a percentage of the fee charged to the client for each session. This fee might vary from patient to patient based on various circumstances, such as difficulty or insurance. If the patient has insurance, many employers might want to wait to pay the intern until the insurance company has paid. That would be illegal.
California Labor Section 204 requires, among other things, that wages earned on the 1st through the 15th of a month be paid no later than the 26th day of that month, and wages earned between 16th day and the last day of a month must be paid by the 10th day of the next month. Wages are earned for services when they are performed for the client. The California Supreme Court ruled in Kerr’s Catering v DIR that it was unfair to allot the employer’s normal costs of doing business to the employee making the employees “insurers of its business losses”. The cost of losses incurred as a result of non-collectibles or late collectibles is an ordinary cost of business.
If you pay your employees by piece rate, be sure to pay close attention to the day the work is done and make timely payroll payments on that basis. If you have questions about piece work payments, please feel free to contact me.