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Can My Job Cut My Regular Pay Rate To Avoid Paying Overtime?

by | Jun 6, 2023 | Employment Discrimination, Employment Law, Federal Law Update, Wage: Overtime |

Not a chance.  Picture this, you are working 40 hours per week at your job making $13.00 per hour.  Your boss says that they need you to work 60 hours per week temporarily.  This sounds good to you.  You have the time and could use the extra time-and-a-half overtime pay.  BUT, your boss then says that they are going to have to reduce your regular pay to $11.15 per hour to compensate for the extra time-and-a-half pay you will be getting.  That does not sound quite as good, right?

This is exactly the scenario that David Thompson found himself in down in the Southern District of Florida.  In the case of Thompson v. Regions Security Services, Inc., the Court of Appeals for the Eleventh Circuit was tasked with answering the question: is this legal under the Fair Labor Standards Act (“FLSA”)?

Fortunately for David, the Court found that his employer, Regions Security Services, Inc., used prohibited math to avoid paying David overtime in violation of the FLSA.  Let’s dig a bit deeper into this.

What Does The FLSA Say About Overtime?

The FLSA prohibits an employer from scheduling an employee “for a workweek longer than forty hours” without paying that employee overtime compensation. 29 U.S.C. § 207(a)(1). To enforce that directive, the FLSA requires an employer to pay two different compensation rates: (1) an employee’s regular rate, which describes the non-overtime hourly rate that they regularly earn; and (2) an employee’s overtime rate, which must be at least “one-and-one-half times the regular rate at which they are employed.

The FLSA generally defines the “regular rate” as including all renumeration for employment paid to the employee.  Put more plainly, the regular rate is total weekly non-overtime wages divided by total weekly non-overtime hours. Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 461 (1948).

In David’s case, he alleged that his employer set two different regular rates.  One of which, was an artificial rate that his employer designed to avoid complying with the FLSA’s overtime-compensation requirement. When David became a security guard, his established regular rate was $13.00 per hour.  He typically worked a forty-hour week. Then, after Regional Security first started scheduling David to work overtime, they reduced his rate to $11.15 per hour. About a year later, Regional Security stopped scheduling David to work overtime. At that same time, they restored his non-overtime pay rate to $13.00 per hour.

To be clear, under the FLSA, an employer can lawfully reduce an employee’s regular rate through wage negotiations or agreements between the employee and employer.  However, the Court here upheld several precedent-setting cases stating that an employer may not “fluctuate [a] non-overtime hourly rate…to avoid paying…overtime.”

As 29 C.F.R. § 778.327 demonstrates, an employer is prevented from playing with an employee’s hours and rates to effectively avoid paying time-and-a-half for an employee’s overtime hours. Otherwise, an employer could use “simple arithmetic” to lower an employee’s rate and increase his hours so that he could never earn time-and-a-half pay—”no matter how many hours he worked.” Id. § 778.327(a).

The United States Court of Appeals for the Eleventh Circuit in David’s case held that David had plausibly made a case that his employer had changed his regular rate to avoid paying him overtime.  In its holding, the Eleventh Circuit vacated the Southern District of Florida’s ruling against David and remanded the case for further proceedings consistent with the Court’s opinion.

Best Wage And Hour Lawyer Blogs on Point:

What do I do if my employer changed my regular pay rate once I started working overtime?

Best Fair Labor Standards Act Lawyer Answer: There are a lot of tricky ways that employers attempt to screw their employees out of their rightfully earned wages. FLSA cases can be complicated.  They require intricate knowledge of the law to successfully navigate.  It would be best to call the right attorney to schedule a free and confidential consultation. (Read: What is the Spitz No Fee Guarantee?; Why Having Skilled Employment Attorneys Is Critical). Call our lawyers in Ohio, Michigan, North Carolina, and Kentucky to get help now. Spitz, The Employee’s Law Firm and its experienced attorneys are dedicated to protecting employees’ rights and solving employment disputes.


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