Flat-Rate Pay Law and Legal Definition

Flat-rate pay compensates each employee of in certain job with the same rate of pay, regardless of performance or seniority. Flat-rate pay may also be considered piece work pay, for instance, when an auto mechanic is paid a set sum by the manufacturer for a warranty repair job. Critics of the pay system believe it rewards quantity, not quality.

Employers may offer flat-rate pay as an incentive pay plan used for boosting technician productivity and thereby reducing staffing levels and overall labor costs. With budgets tight, the topic is getting renewed interest in the public sector. A flat rate system sets time standards for common tasks. Customers are billed and workers are paid for this amount of time regardless of how long tasks actually take.