In per-piece pay structures, payment is based on the number of “pieces” of work that a worker completes. The worker is paid a monetary rate of a certain number of cents or dollars for each piece of work. What constitutes a “piece” worthy of the set rate is defined in advance. The hourly wage of a worker engaged in piece work will vary based on how skilled she is in completing the work and how time-consuming each piece of work is.
Piece work, particularly when done from home, may have no set time frame for completion, but some jobs may have hourly or daily quotas. Piece work has been used in manufacturing goods but can also be used in jobs with non-tangible work outputs, such as data entry. Read more about how and what data entry pays.
The concept of piece work has been around a long time--long before Internet, online jobs and data entry. It has been used in garment factories and other manufacturing jobs to pay workers based on production since the time of the Industrial Revolution. In today’s economy, it is still used that way, especially in developing nations. However, piece work is also used in fields such as data entry, translation, writing, editing and call centers. In these lines of work, the “pieces” may be clearly defined and incorporated in the rate, such as per-minute talktime, per call, per word, per page or on a project basis.
In the United States and in other countries with minimum wage laws, this type of pay rate must be used in conjunction with minimum wage laws for employees. For instance, an employee who works at a $.01 per-piece rate and completes 60 pieces in an hour would not receive $6.00 but would receive her state’s minimum wage, which might be, for example, $7.25 an hour. However if she is able to work fast enough to complete 80 pieces in an hour she can earn $8.00 per hour. So, per-piece rate pay can act as an incentive for employees.
However, it is very important to note that only employees are protected by minimum wage laws, not independent contractors, and per-piece pay structures are very often used as pay rates for freelancers, or independent contractors.
Pitfalls of Piece Work
- Work could be rejected for quality issues - Work-at-home scams in assembly work and stuff envelopes use poor quality as an excuse to refuse to pay. Acceptable quality must be clearly spelled out in any kind of per-piece pay arrangement.
- Lower wages at beginning - Even those with experience in a field will need a little time to ramp up
- No pay when work is not available - This is particularly a problem for call center workers who may be paid per call or per talktime minute and must wait for calls to come in.
- No minimum wage protections - This is only true of independent contractors or freelancers.
Benefits of Piece Work
- Opportunity for increased pay - As a worker becomes skilled in a particular type of piece work, his or her speed will increase.
- Flexibility in work hours - This isn’t true of all piece work, but for independent contractors, often work can be done when the worker chooses.