Piecework

Piecework is a compensation arrangement under which employees or third parties are paid based on the number of units produced. Under this arrangement, a standard amount is paid for each unit produced. Where there are minimum wage laws in effect, the minimum wage must still be paid to employees, irrespective of the number of units produced. This approach to compensation will only work if product quality can still be assured; otherwise, employees tend to focus on increasing their production volume, irrespective of quality considerations.

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