Employers can’t get around the overtime requirements of the Fair Labor Standards Act (FLSA) by decreasing employees’ regular rate of pay as the length of their workweek increases, a new appellate court ruling shows.
Employers may lawfully reduce employees’ weekly average rate, but only if the reductions are not an attempt to avoid or limit overtime costs. The key consideration is whether a change “is justified by no factor other than the number of hours” an employee works.
In Thompson v. Regions Security Services, Inc., the 11th Circuit Court of Appeals found there was enough evidence to conclude that a Florida-based company may have reduced one of its employees’ non-overtime hourly rate to avoid paying him overtime.
The employee was hired at a rate of $13.00 per hour and initially worked for 40 hours per week. Then his employer started scheduling him to work roughly 60 hours per week and soon lowered his rate to $11.15 per hour. As a result, his overtime rate became $16.725 per hour (one and one-half times his regular rate of pay) and he earned $780.50 per week (40 straight-time hours at $11.15 (or $446.00) plus 20 overtime hours at $16.725 (or $334.50)). That turned out to be only 50 cents more than he would have earned if he were paid his former $13.00 per hour rate for all 60 hours of work.
This arithmetic, combined with the employee’s allegations that his employer went back to paying him $13.00 per hour after it stopped scheduling him for overtime, supports the “reasonable inference” that the employer had lowered his hourly rate to avoid paying him overtime, the 11th Circuit reasoned.
It sent the case back to a lower court for further proceedings.
