Understanding Piece-Rate Pay in California: Lessons from the J.B. Hunt Case

California wage and hour laws can be challenging for employers, especially when it comes to paying employees on a piece-rate or per-task basis. While this type of compensation can reward productivity, state law adds extra requirements to make sure employees are still fairly paid for all of their time on the job.

A recent case, Williams v. J.B. Hunt Transport, Inc. (August 2025), provides some helpful guidance on how employers can structure their pay plans to stay compliant.

What Is Piece-Rate Pay?

Piece-rate pay means an employee earns a set amount each time they complete a task. For example:

• A mechanic might be paid per car repaired.
• A driver might earn extra pay for each mile driven or stop completed.

Under California Labor Code section 226.2, employers who use piece-rate pay must also:

• Pay employees for rest breaks and
• Pay employees for nonproductive time (work not tied to the piece-rate activity, like cleaning up a workstation).

This ensures employees don’t lose wages for time that isn’t directly tied to tasks.

The J.B. Hunt Pay Plan

To address these requirements, J.B. Hunt created a compensation plan for its California drivers. The plan worked like this:

1. Hourly Pay: Drivers received at least the minimum wage for every hour worked (whether productive or not).
2. Activity-Based Bonuses: On top of that, drivers could earn extra pay based on tasks such as miles driven, stops made, or loads handled.

The company then used a formula to determine whether drivers earned a bonus on top of their hourly pay.

Employees challenged this system, arguing that it was still a “piece-rate” plan in disguise and didn’t properly account for nonproductive time.

What the Court Decided

The Ninth Circuit Court of Appeals ultimately sided with J.B. Hunt. The court found that the plan was legal because:

• Drivers were always paid at least minimum wage for all hours worked, including breaks and nonproductive time.
• The bonuses were extra compensation on top of guaranteed wages, not a substitute for them.

In short, the court said J.B. Hunt’s plan fit within California’s “safe harbor” rules for piece-rate pay.

Why This Matters for Employers

This case is an important reminder: piece-rate pay can work in California, but only if it’s structured carefully. Employers must avoid systems that “borrow” from task-based pay to cover other hours. Instead, every hour worked must be compensated at minimum wage or higher, with any piece-rate or task-based pay treated as additional earnings.

Practical Tips for Employers

If your business uses or is considering piece-rate or task-based pay:

• Guarantee hourly pay: Make sure employees receive at least minimum wage for every hour worked, including rest and downtime.
• Treat bonuses as add-ons: Piece-rate or activity-based pay should be structured as extra earnings, not as the only source of pay.
• Review your formulas: Compensation systems can become complex. Check that they don’t unintentionally short employees for nonproductive time.
• Document clearly: Put your pay structure in writing and make sure employees understand how their wages are calculated.
• Consult regularly: Work with HR or legal professionals to review pay plans and avoid compliance pitfalls.

Final Thought

The Williams v. J.B. Hunt decision shows that California employers have the flexibility to design incentive pay systems — as long as they build in protections for hourly wages. With careful planning, businesses can reward productivity while still staying compliant with California’s strict wage and hour laws.

(Centralize HR, 2025)