Minimum wage legislation makes piece-rate compensation plans somewhat challenging to implement.

Question

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Minimum wage legislation sets a minimum amount that employees must be paid per hour worked. If an employee working on a piece-rate compensation plan does not earn at least the minimum wage per hour, the employer would be in violation of the law. Thus, employers who implement piece-rate compensation plans must ensure that their employees are earning at or above the minimum wage, which can be challenging if the rate of productivity fluctuates.

Minimum Wage Legislation Makes Piece-Rate Compensation Plans Somewhat Challenging to Implement