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Eleventh Circuit: Proof of Employee’s Understanding of ‘Fluctuating Workweek’ Pay Dooms FLSA Claim

signing documentThe Fair Labor Standards Act allows employers to use various different methods to pay employees while still remaining compliant with the law. One of these methods is the “fluctuating workweek method,” or paying a base weekly salary to an employee regardless of the hours the employee worked. The key to using this method and remaining in compliance with the law is establishing a clear understanding about how the employee will be paid. In a recent 11th Circuit Court of Appeals case of note to Georgia employers and employees, the employee’s testimony in a deposition proved that the required level of “clear understanding” existed in this case, and the employer was not in violation of the law’s overtime pay rules.

The employee in the case, Danilo Lopez Garcia, took a job working for Yachting Promotions, Inc., a company that puts on boats shows and special events. According to Garcia, he worked more than 40 hours in each week that Yachting employed him, but he was never properly compensated for the hours he put in. As a result, he brought a FLSA lawsuit against the employer for failing to pay him overtime that he had earned. The employer argued that Garcia wasn’t entitled to time-and-a-half overtime pay because he signed a document in which he agreed to be paid under the “fluctuating workweek method.”

Under this method, an employee receives a fixed salary regardless of the number of hours he works each week. To utilize this method, the employer must do several things. One of these things is make sure that an employee whom it pays using the fluctuating method understands that his pay is a fixed salary for all hours worked each week. In Garcia’s job, his employment agreement called for the employer to pay him a base salary of $779 every week. Garcia even signed a written document stating that he understood that he would be paid $779 per week and that his pay was in accordance with the fluctuating workweek method.

Garcia argued that he should still be allowed to pursue his FLSA case because he did not understand what he had signed. The document was in English, and his first language was Spanish, and all he understood, Garcia contended, was that he must sign the document or lose the job. Even though the law requires “a clear mutual understanding of the parties” that the pay would be under the fluctuating workweek method, the trial court nevertheless awarded summary judgment in favor of the employer, and the 11th Circuit upheld that ruling.

How did the employer get around the employee’s arguments regarding a lack of understanding? In this case, even without the document that Garcia signed, the employer nevertheless had ample evidence that the employee understood the nature of his pay. The law only requires that “the employee understands that his base salary is fixed regardless of the hours worked.” Garcia, in his deposition, testified that he understood that he was a salaried employee who received a base pay of $779 every week regardless of the number of hours worked. That testimony was enough to meet the understanding requirement of the law and require a ruling in favor of the employer in this case.

The law allows employers to use various methods for paying an employee. Georgia employers should make sure that, whatever method is used, they administer that method in a way that complies with the law, including ensuring that the employee understands the method of pay. The skilled Georgia overtime attorneys at Mays & Kerr have helped many Georgia employers and employees with questions and issues related to FLSA and overtime pay compliance, and they are ready to assist you with your case as well.

To speak with one of our lawyers about your case, call 1-877-986-5529.

More blog posts:

Georgia Employer Allowed to Keep Some of Employees’ Tips as Long as Employees Received Minimum Wage, Atlanta Employment Attorneys Blog, Sept. 14, 2016

Georgia Bodyguard’s $65K Damages Award in Unpaid Overtime Case Withstands Appeal, Atlanta Employment Attorneys Blog, Aug. 11, 2016