Court: Day Rate Not “Piecework” Under the NMMWA

Under New Mexico’s overtime statute, the Minimum Wage Act (the “NMMWA”) an employer is required to pay an employee for overtime work. See NMSA 1978, § 50-4-22(E). An `employee’ includes an individual employed by an employer, but shall not include … employees compensated upon piecework, flat rate schedules or commission basis….” NMSA 1978, § 50-4-21(C)(4) (2019). Notably, the NMMWA “does not define the terms `piecework,’ `flat rate,’ or `commission,’ nor has the New Mexico Supreme Court addressed what types of payment systems fall under these exempted categories.” 

It is not unusual for a defendant sued under the NMMWA for paying day rates in lieu of overtime wages to argue, in a motion to dismiss or a motion for summary judgment, that its compensation system falls within the piecework exception, and thus that it is not liable for overtime wages.  Several courts in recent years have rejected this argument, including Judge Gonzalez in a recent opinion.  An oilfield worker, formerly a Completions and Production Consultant, worked for Steward Energy II, LLC from May 2018 through April 2020. Steward is an oil and natural gas exploration and production company. The plaintiff filed the collective action lawsuit to recover unpaid overtime wages and other damages under the Fair Labor Standards Act (FLSA) and the New Mexico Minimum Wage Act (NMMWA).  Steward filed a motion to dismiss, arguing that the worker is not an “employee” covered by the NMMWA because of the statute’s piecework exception.  Specifically, Steward argued that the day rates it paid to the plaintiff constituted “piecework” and/or “flat rate schedule” compensation, compensation systems exempting an individual from the NMMWA definition of “employee.” The Court rejected this argument, citing several cases.  First, it noted “the commonsense definition put forth in Armijo v. FedEx Ground Package Sys., Inc., 405 F. Supp. 3d 1267 (D.N.M. 2019)…that “payments made `per unit’ and tethered to a specific job or item, as opposed to payments tethered to hours spent working, qualified as piecework payments.”

It next cited Kerr v. K. Allred Oilfield Services, LLC, a 2020 District of New Mexico case. Kerr, 2020 WL 5702809 (D.N.M.), which had denied a motion to dismiss in which the defendant made the same day rate/piecework argument.  It then cited Martinez v. FedEx Ground Package Sys., Inc., 2021 WL 1026732, at *3 (D.N.M.), which reached the same conclusion. Consequently, Judge Gonzalez found that the Plaintiff’s allegations demonstrated that he was an “employee” who is not exempt from receiving overtime payments under the NMMWA, and thus the Court denied the motion to dismiss.