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Lane
Lane, JD, MBA, CFP, CRPS
Category: Homework
Satisfied Customers: 10098
Experience:  JD, MBA, CFP & Chartered Retirement Plans Specialist
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If an hourly manufacturing employee runs parts that require

Customer Question

If an hourly manufacturing employee runs parts that require rework and / or a scrap and remake, can that employee be asked to perform the rework unpaid?
Submitted: 1 year ago.
Category: Homework
Expert:  Lane replied 1 year ago.

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Expert:  Lane replied 1 year ago.

Hi,

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Customer: replied 1 year ago.
I am not certain if I can understand this as a "yes", proceed, or no, do not.
Expert:  Lane replied 1 year ago.

See this from Department of Labor (DOL)

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Rework

When an employee must correct mistakes in his or her work, the time must be treated as hours worked. The correction of errors, or "rework", is hours worked, even when the employee voluntarily does the rework.

Customer: replied 1 year ago.
is that a "No", we cannot legally ask an employee to perform the rework un-paid?
Expert:  Lane replied 1 year ago.

It is a do not ... I originally pulled the information from a legal handbook (not authoritative, or rule of law, andit looked as if it were ok) ... But in going to DOL itself, they state definitively that re-work is hours worked...

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That is correct

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See this: http://webapps.dol.gov/elaws/whd/flsa/hoursworked/screen1d.asp

Customer: replied 1 year ago.
Can the hourly wage be reduced if said employee agrees it is their error?
Expert:  Lane replied 1 year ago.

I would not go there without including it in the job description and getting them do sign/agree before taking the job ... let me look at the FSLA regs and see if they address...

Customer: replied 1 year ago.
Thank you.....I will wait to hear what you have to say in regard to that.
Expert:  Lane replied 1 year ago.

OK, my intuition was good

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From DOL, Wage and Hour Division

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Paying a commensurate wage (a % of the prevailing wage for the same work) requires that the employer accurately define both the minimal acceptable quantity standard (amount of work/time) and the minimal acceptable quality standard before workers are evaluated.

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These standards must be predetermined, written, and clearly articulated to the workers before the necessary time studies to SET these standards are conducted.

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Examples of quality standards for hourly paid jobs could include such things as the number of streaks left on a mirror or window to be cleaned by a janitor, or the number of pieces of mail that were incorrectly sorted by a mail room attendant; or how many "patches" of uncut grass remain on a lawn being mowed by a landscape worker.

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Determine the "standard" for the job - which reflects the productivity, in terms of quality and quantity, of an experienced worker

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Does the Department of Labor require the use of any particular work measurement method when evaluating productivity levels? No, but the work measurement method must be verifiable through the use of established industrial work measurement techniques.

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For example, Wage and Hour accepts such methods as stopwatch time studies, Methods-Time Measurement (MTM) and Modular Arrangement of Predetermined Time Standards (MODAPTS). Whatever work measurement method is used, neither the standard setter nor the worker may be evaluated before having the opportunity to become familiar with the job or at a time when the worker is fatigued or subject to conditions that result in less than normal productivity.

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It is recommended that at least three different workers who do not have disabilities for the work being performed be evaluated and that their individual productivity ratings be averaged to determine the standard. Such averaging, although not required by the Regulations, 29 CFR Part 525, takes into consideration that even experienced workers work at different paces.

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Where we see re-work referenced most is in setting a COMMENSURATE wage for the person with a disability.

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This calculator may give you a way to determine a factor, a %, for regular work vs the time lost through re-work (again, used to set commensurate wage for a person with a disability, but could be a fairly standardized way for you to determine the percentage based on lower productivity.

http://www.dol.gov/whd/sec14c/calculators/Rework.htm

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But again, unless this is all codified (say in a job description) and signed and agreed to by the employee before accepting the job, you are risking FSLA fines/sanctions.

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Likely, the administrative overhead required here - and the potential that the employee has a cause of action under the GENERAL RILE (re-work time is paid time) - this may not be cost effective

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However, doing this kind of up-front,(and then documenting/evaluating workers AGAINST those standards) could allow both for the ability to pay a commensurate wage (again, if part of an accepted employment contract) AND set standards that may help productivity generally, communicate expectations (thereby pre-empting the need FOR re-work) and make hiring, firing and evaluating at will employees a less risky proposition.

Customer: replied 1 year ago.
Okay, so I believe I can set something up --
Hourly Wage = "X"
-- If a worker creates rework due to error, their hourly wage shall be "Y" to correct their rework, so long as I have documented this and they have signed off on it.Correct?
Expert:  Lane replied 1 year ago.

If you have not already done this standard setting work, and developed the pre-employment application/contract and had employees sign as accepting, you would fall under the general rule, re-work is time worked and paid.

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Hope this has helped

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Lane

Customer: replied 1 year ago.
If my company were to make an amendment to our Employee Handbook, with an affectivity date, and all participants sign off on it, then I could incorporate, correct?
Expert:  Lane replied 1 year ago.

To stand up to DOL scrutiny you'd need to (1) do the actual standardized time and motion studies to set the standards (2) codify that in the job description/handbook (3) evaluate periodically and provide the necessary feedback (1st 2nd 3rd pink slip type of practice) and this can work ... I would have an HR consultant help you set it up

Customer: replied 1 year ago.
The rework would have nothing to do with productivity. Rework would be defined as a dimensional error that resulted in rework and / scrap and remake.
Customer: replied 1 year ago.
Example: Employee "A" runs an order of 500 pieces.
-- Those 500 pieces are missing one hole.
-- It will take 2 hours to install that one hole for the 500 pieces.
--> Employee "A" would be paid 50% less than his normal wage for the rework time.Caveat: Said policy has been reviewed and approved by employees that would be affected.Thoughts,Tim
Expert:  Lane replied 1 year ago.

No,

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You must do the time and motion study to really determine that productivity was truly cut in half

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You can't just disassociate this from productivity ... and this CANNOT be advertised (even perceived) as punitive.

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It must tie to productivity, in order logically to tie to your reduced profit

Expert:  Lane replied 1 year ago.

Further, you cannot simply put this into effect for an employee who wasn't hired UNDER that condition of employment AND accepted the job based on that criteria

Customer: replied 1 year ago.
Hmmmm, but it doesn't have anything to do with productivity, it has to with quality and cost????
-- don't understand how productivity could play in to it.We are a job shop / manufacturer.If a team member misses a step and causes rework, our customer service lapses, our delivery dates are effected, and our cost of doing business is effected.Alternative Point of View --
Person A runs 500 pieces
-- Said 500 are missing a hole and it is their error, they agree it is their error
Assuming we have the policy in place (signed of on)
Can the rework be compensated at 50% of actual wage.
-- Cost is the issue.
Expert:  Lane replied 1 year ago.

Listen, I have an 11:30 meeting ... when I get back to the desk here, I'll see if I an find something that will give you a model.

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But just remember that the task at hand here is to show that (1) you've only reduced in a way that offsets your damage to profits (productivity is the only way you can do that) (2) It MUST be accepted as a condition of the job ... a good document would have a place for the new employee to sign not only at the bottom, but where they specific condition is address in the document as well, as an acknowledgement ("I acknowledge that ...") (3) you are essentiall making a case here that if employee complains... you haver accomplised what's needed to be exempt from the general rile

Customer: replied 1 year ago.
Okay -- Will wait to hear, and thank you so far.
Expert:  Lane replied 1 year ago.

Cost is a part OF productivity ... Productivity means output (of acceptable quality)/time

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This is a little simplified but...

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So you must look at, say, 100 widgets being produced in 1 day under normal circumstances with a trained employee out of the training period

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vs 80 being produced because the time needed to re-work took you down to only 80 acceptable widgets being produced in the same amount of time

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OR you can turn it around and look at the amount of time taken to produce 100 widgets vs the time taken to produce 100 (with re-work time included) so say that now (with re-work included)... it took 10 hours rather than 8 ...... pay could be reduced proportionately 8/10 = 80% of regular pay

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Depending on your process, you can get this down to a per piece number to apply, based on the number pieces needed to be re-worked ... But it HAS to be commensurate with your true extra cost over time, which is productivity, which can be related directly to lowered profit

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Gotta go, but I'll see what I can find

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And again just remember DOL will start with the assumption that re-work time is paid time .. you have to build a system that logically shows you are fairly accommodating in a way that keeps your net profit where it would be if the re-work wasn't and using this as a training opportunity, rather that punishment

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If this HAS helped, and you don't have additional questions on this, I'd appreciate a positive rating (by clicking the stars or smiley faces on your screen) ... that's the only way I'll be credited for the work here.
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Expert:  Lane replied 1 year ago.

See this, from http://webapps.dol.gov/dolfaq/go-dol-faq.asp?faqid=359

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Question: How do I determine "commensurate wage rates"?

Answer: A commensurate wage rate is a special minimum wage paid to a worker with a disability which is based on the worker's individual productivity, no matter how limited, in proportion to the wage and productivity of experienced nondisabled workers performing essentially the same type, quality, and quantity of work in the geographic area from which the labor force of the community is drawn. An example of a commensurate wage rate would be as follows:

  • If an experienced nondisabled worker makes boxes and can produce 40 boxes in an hour, but a worker with a disability can only produce 10 boxes an hour, the worker with a disability is considered 25 percent as productive as the experienced nondisabled worker and should receive at least 25 percent of the prevailing wage rate for such work
  • If the prevailing wage rate is determined to be $6.00 an hour, the worker with the disability employed under a special certificate should receive at least 25 percent of that wage rate or $1.50 an hour for performing the box production work. This is an extremely simple example, but it demonstrates the principle of commensurate wage rates.
  • Properly established piece rates yield commensurate wage rates. A piece rate fixes a price on each completed unit of work. This rate is derived by dividing the prevailing wage rate by the average hourly production of individuals not disabled for the work to be performed.
  • For example, if three nondisabled persons worked a total of ten "fifty-minute" hours and produced 2800 units in total, the average production would be 280 units per hour (2800 units divided by 10 hours). Assuming the test involved unskilled work, and the prevailing unskilled labor rate in the vicinity is $5.15 per hour, the piece rate would be $0.018393 per unit ($5.15 divided by 280 units). A disabled worker producing 185 pieces in an hour would earn $3.40 for that hour (185 pieces x $0.018393 = $3.40).

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As I mentioned before this is the methodology for establishing a commensurate wage rate for someone with a disability who CANNOT produce at the same pace (hence lower productivity, hence more cost over the same time, hence lower profit for a given period)

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Again, I would advise you to read the second section here: http://webapps.dol.gov/elaws/whd/flsa/hoursworked/screen1d.asp under the header "RE-WORK."

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Expert:  Lane replied 1 year ago.
THIS ANSWER IS LOCKED!

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