1. Field Operations Handbook DOL
Piece Rate and Hourly Rates
9/21/16

2. Investigators guide to auditing
Handbook and training is provided to detail what needs to be conducted during a DOL audit.
This is not necessarily what is stated in the DOL regulations.
Despite contradictions, we want to make you aware of what investigators are trained to understand and look for.

3. Formally known as: Sheltered Workshops Current Names: CRP Work Centers
DOL’s definition of Sheltered Workshop/ Work Center:
Centers that have historically provided rehabilitation services, day treatment, training and /or employment opportunities to individuals with disabilities. Work Centers no longer refer to themselves as “sheltered workshops” nor do they perceive themselves as offering “sheltered” employment.
See also Work Center (FOH 64b00)
Formally known as:
Sheltered Workshops
Current Names:
CRP
Work Centers
Extended Employment

4. Quotes from the Operations Handbook Commensurate Wage
*The commensurate wage is always a subminimum wage.
What is a commensurate wage? A commensurate wage is a subminimum wage paid to a worker with a disability that is based on his or her individual productivity (no matter how limited) in proportion to the productivity of experienced workers who do not have disabilities performing essentially the same type, quality, and quantity of work in the vicinity where the worker with a disability is employed. The commensurate wage in the context of work subject to Section 14(c) is always less than the applicable minimum wage required by section 6(a) of the FLSA, or where applicable, the prevailing wage required by a McNamara-O'Hara Service Contract Act (SCA) Wage Determination.
Matter of wording?
Can a person be paid a commensurate wage and earn more than minimum wage? OR
Once they produce beyond $7.70 (7.25) they no longer fall under 14c.

5. Defining a Disability
*The term worker with a disability is defined in section 14c 1 as an individual whose earning or productive capacity is impaired by age, physical or mental deficiency or injury; blindness/ intellectual and developmental disability, Cerebral Palsy, alcoholism, drug addiction or age.
(Age is those over 70 – how do we get this person certified?)
*Only when a disability impairs the individual for the job to be performed may an employer pay a subminimum wage.
- “Some workers, after acquiring proper training and or experience successfully overcome disabilities”.
Federal government defines as “disability” and “targeted”. 7% and 2%
*The WHD recommends that work centers re-evaluate and update the data used to justify employing learning disabled workers at a subminimum wage on an annual basis.

6. Example of Not Disabled for the Job
This is Joyce.
Joyce excels at mouse traps – red tips. It is a one step job.
Joyce has performed this job off and on for over 10 years.
Due to her productivity output, Joyce now earns minimum wage.
She still has a disability.
This is the only job at BCI, that Joyce can do. All other jobs she has timed out at around 14% of industrial standards.
Concern: If / when mouse traps is not running, she is disabled for all other jobs and cannot earn minimum wage.
Taking her back into 14c.

7. The DOL Certificate The certificate is not a statement of compliance
Effective dates for certificates is a 2 year period.
The certificates are issued on an establishment basis to 3 kinds of facilities:
Work Centers -
Business Establishments for the employment of workers with disabilities.
Hospitals or Residential Care Facilities
If the employer is a multi-establishment enterprise, the WHD’s policy and procedures require that certificates be obtained for each establishment in which workers with disabilities be employed.

8. Most Common Violations
Failure to use proper sources when conducting a prevailing wage survey.
Failure to properly document the prevailing wage survey and maintain that documentation.
Failure to obtain the experienced rate when conducting prevailing wage surveys.
Failure to determine prevailing wage rates at a minimum of once a year.
Failure to adjust prevailing wage rates after a minimum wage increase.
Wrong type of business, location – Phil
Form used, saved electronically.
Use the rate earned after probationary period.
You should have completed your prevailing wage. If not, we can help.
For 2017, we’ve had two prevailing wage adjustments.

9. Violations
New prevailing wage established. Make sure to apply this to every job.
Minimum of 6 months. Adjust pay within that pay period.
Ok to start with blanket rate but must prove a time study was completed within 30 days and retro pay differences.
When in doubt, round up for time studies.
Failure to adjust piece rates and hourly rates as a result of adjustments and/or changes to the prevailing wage.
Failure to evaluate hourly paid workers with disabilities on a timely basis and/or failure to timely adjust the hourly rates after the employee is evaluated.
Payment of a blanket training rate rather than basing pay on the commensurate wage.
Rounding errors in time studies when computing the commensurate wages where the piece rate multiplied by the standard units per hour fails to yield at least the prevailing wage rate.

10. Violations
Ensure that task analysis are equal for standard setter and person timed. Jigs are used properly.
DOCUMENT everything!
Upon hire request proof of disability.
DESE certification
Hourly Time Studies – each timing should include an explanation on why that person is disabled for that job.
Piece time studies – document for each job worked.
?? Every hour counts. If you find or are notified of an error, fix it immediately with a retro pay.
Federal Contracted work in excess of $2500
Inadequate time studies, such as failure to include irregular elements.
Failure to ensure the worker has a disability for the work being performed, or failure to maintain and or provide documentation to support that the worker has a disability for the work he or she performs.
Failure to count all hours worked.
Failure to pay full fringe benefits for work on SCA contracts.

12. Down Time
Workers with disabilities including those paid piece rates, are required to be paid for downtime at a rate equal to their average hourly earning during the most representative period, not to exceed a quarter.
Often during down time, work centers will provide rehab series to workers during periods of extended downtime.
Such time is clearly identified, recorded and segregated on time records and the services are provided in an area away from the production area.
To avoid down time (during change overs) disperse the group to another line.
You can pay the person their hourly rate, while they wait.
Have a binder of training ideas on hand. Document this training.

14. Federal Contracts
Section 6(e) of the FLSA requires an employer who is either a prime contractor or a subcontractor on a contract to provide services to the Federal Government to pay all employees, including staff and employees not working on the service contract, at least the FLSA minimum wage.
Employers who have obtained the proper certification under section 14c may pay a subminimum wage to SCA service employees and other employees not working on the contract who have disabilities for the work being performed.
Source America Contracts (FOH64b03)

15. Volunteers Unpaid volunteers:
The use of volunteers by a work center or hospital does not violate the terms and conditions of its subminimum wage certificate.
HOWEVER
Individuals who volunteer to help with the work center or hospital meet production deadlines required by contract to subcontract work orders are not true volunteers and an employment relationship exists when they are engaged in such activities.
Laws of interstate commerce

16. Work Samples and Simulations
Accordingly, the DOLs position since 1985 has been that simulation performed by the workers with disabilities receiving sub minimum wage under 14c in work centers is not hours worked and compensation need not be paid for the activity, provided none of the material, goods or series produced enters into the stream of commerce by being intermingled with the normal production of the employer.
Typically, such materials would be discarded or recycled for future use in work simulation.
This is DOLs position even if the purpose of the simulated work is to increase the productivity of the worker with a disability.

17. Transportation and/or Travel Time
Any time spent in transportation provided by the facility between job sites during the course of the workday is hours worked and the employees shall be paid a wage rate that is at least equal to his or her average hourly earning during the most recently completed representative period.

18. Lets start our investigation
Investigators guidance on how to conduct a thorough DOL investigation

19. Begin the investigation by sending an appointment letter to the employer prior to visiting the establishment to ensure the presence of the Executive Director will be available. Specify the list of 13 items that will be reviewed.
“Shortly after the initial conference, especially when the employer is a work center, the WHI should tour the facility with the director or other responsible official, in an effort to determine the following”:
- Review the apparent functioning level of the workers with disabilities and whether any of them appear not to have disabilities for the work they are doing. Request the names of the workers who do not appear to have disabilities for the work being performed at the time of the tour.
- The production methods used on major contracts. This will help identify which jobs or job elements are to be time studied.

20. Interviews
Workers with disabilities” in order to determine compliance, parents or guardians should be notified and they will have sufficient knowledge of the workers employment situation.
Staff: The WHI should attempt to interview floor supervisors of workers with disabilities.
Select at least two workers with disabilities from the profile worksheet and interview the floor supervisor who oversees their work.
Using standard interview techniques, reconstruct these employees starting and
stopping times, average number of hours worked per day and per week, average
units produced per hour for piece rate workers and average earnings per day per
week.

21. Interviews continued
Compare the information obtained from the interviews with the information reflected on payroll and time records.
Verify the adequacy and accuracy of the prevailing wage survey.
If there has been a minimum wage change during the investigation period, ask if the prevailing wage was verified after the minimum wage change and if piece rates and hourly rates were changed accordingly.
The supervisor should be questioned about such things as downtime, restocking of supplies and how workers are paid during these activities.

22. ISSUES REQUIRING SPECIAL ATTENTION
Disabled for the work to be performed.
If the disability does not affect his or her accomplishment of the specific tasks performed, the employee is due the full applicable section 6a minimum wage.
Disabilities that are not visibly obvious must be supported by medical or psychiatric reports or psychological tests. documentation
Posting of notices and informing employees of the terms of the certificate. This must be displayed at all times. Employee break room
Informing employees of the terms of the certificate. Must be informed orally and in writing. Handbook

23. Prevailing Wages
Determine the prevailing wage is the first step toward establishing the correct commensurate wage.
The prevailing wage survey must be conducted prior to paying a subminimum wage.
Phil

24. Work Measurement
This amount of time becomes the standard against which the productivity of the worker with a disability is compared to determine the commensurate wage.
Performed by a qualified, competent worker who does not have a disability for the work being performed.
Done at a pace that could be maintained.
For workers being paid piece rate, an allowance must be made for the workers personal time, fatigue and unavoidable delays (PF&D)
The regulations do not require a particular method. Most commonly used:
Stopwatch Methods Time Measurement (MTM) MODAPTS
Setting the standard: Piece and Hourly example

25. Time Studies and Jobs Paid Piece Rate
When the worker with a disability is to perform a production job, the simplest and most objective method of payment is by piece rate.
The WHD does not require facilities to use one specific work measurement method, nor does the WHD prescribe the format or length of the time study.
During the investigations, WHI’s will normally conduct or oversee the employer conduct time studies, either to verify the accuracy of the employers time studies or because the employer has failed to conduct the necessary studies.
Be sure to check the employers rounding practices.

26. Piece Rate / Hourly Rate - Similarities
Both require an accurate description of the work being performed.
Both require the selection of an individual who does not have a disability for the work to be performed who is familiar with the work and capable of maintaining a consistent, efficient pace.
Both require that a time study be conducted of the individuals who do not have disabilities for the task performing the same tasks that the worker with a disability will be employed to perform.
Both require consideration of quantity and quality of production.

27. Differences Piece Hourly
Time study the worker who does not have a disability to set piece rate for workers with disabilities. The worker with a disability is not observed and/or evaluated.
PF&D – required
Quality Standards are established prior to conducting the time study.
Time study the worker who does not have a disability to establish the standard against which the worker with a disability is then observed and/or evaluated.
PF&D – not required
Employers must hold both the standard setter and the worker to the same standard of quality.
DOL prefers piece rate over hourly – per the field operations handbook.

28. Ensuring accuracy in Piece Rates
1. Multiply the employers piece rate by the standard setters expected productivity. This must equal at least the prevailing wage.
2. When the number of units the standard setter has to produce, at the established piece rate, to earn the prevailing wage represents a reasonable amount.
3. Piece rates have been increased in the past year.
4. When an adequate PF&D allowance was incorporated into the time study used to establish the piece rate.
SWI – example of accuracy in calculating piece rate.

29. Ensuring accuracy in Hourly
1. Must be evaluated, at a minimum, every 6 months.
2. Initial evaluation of a workers productivity to determine productivity should be made with in the first month of employment. Retro difference from start date.
3. Documentation must be held (payroll notice)
4. Workers wages must be adjusted accordingly no later than the first pay period following each review.
5.Wages should increase each year, as workers become more experienced.
6.The WHI should notice if there are workers who do not appear to have disabilities for the work to be performed, yet are paid wages significantly below the minimum wage.

30. Task Analysis Develop a job description:
Define specific job duties, responsibilities and general tasks
Specify the types of equipment and materials to be used.
List the types of skills, training or experience required.
Indicate the days and times the work is performed if such factors could have an impact of the productivity of the worker.
Example:

32. Hourly
Just as it is recommended that either three different standard setters be timed or that the same standard setter be timed three different times and the results average, the worker with the disability should also be timed on three different occasions and the results averaged.
There are some hourly paid jobs that do not lend themselves to complete time- based measurement because the entire job cycle is too long, or because the amount of work depends upon the actions of others.
DOL recommends setting up a “standardized job simulation”
Another option, making certain “un time-able” jobs are minimum wage positions.

33. Letter of findings State the period of investigation
List violations found for staff employees separately from those for clients
List the violations by act, include number of employees affected and amount of back wages.
Provide the citation or regulation for each violation found
Employer will be asked to respond to the letter of findings

34. DOL on line calculators
Setting Standards
Prevailing Wage
Time Studies – both piece and hourly
You can print the calculated information and add that to your file.
WHD Field Operations Handbook: