Atlanta Employment Attorneys Blog
The rules the Fair Labor Standards Act sets up regarding time-and-a-half overtime compensation are often nuanced and can be complicated. Employers risk noncompliance when they fall into the trap of oversimplification. For example, paying a worker a large sum every week or month does not necessarily mean that the worker is exempt from overtime compensation. To ensure your (or your employer’s) pay practices are fully compliant, you should talk to an experienced Atlanta wage and hour lawyer.
A recent unpaid overtime case that began in neighboring Tennessee is a good example of how high earnings do not always equal exempt status for employees.
The case involved a professional pipe inspector. The inspector’s employer paid him a “guaranteed weekly salary” of $800 and an additional $100 per hour for each hour over eight he worked in a given week. The employer classified the inspector as salaried and did not pay him time-and-a-half overtime. That meant the inspector, who averaged 52 hours per week, received $100 per hour for all hours (and not $150 for hours 41 and above).
The inspector sued, arguing that he was a non-exempt hourly worker, that the employer misclassified him as exempt, and improperly failed to pay him time and a half for his overtime hours. In other words, even though the inspector made over $250,000 a year, the employer may still have illegally underpaid him.
The outcome of the inspector’s case rested upon whether or not the inspector qualified under the exception for “executive, administrative, or professional” (EAP) employees. Many EAP exception cases succeed or fail based on the nature of the worker’s job duties. In the inspector’s case, the crux was how he was paid, not what tasks he performed.
As the Sixth Circuit Court of Appeals pointed out, an “employee works in a bona fide executive, administrative, or professional capacity if (among other things) he is paid on a ‘salary basis.’” One way to satisfy the salary-basis requirement is to pay the worker by the year, month, or week. Put another way, the worker must receive a “predetermined amount” on a “weekly or less frequent basis.”
According to the court, the fundamental question was whether paying a worker a flat, predetermined sum (of any amount) each week and supplementing that amount with an hourly or daily rate satisfies the salary basis requirement.
‘A Week’s Worth of Work’
The appeals court concluded that the general answer was “it depends.” Under the specific facts of this case, the answer was “no.” An employer can meet the requirement if it pays a predetermined amount that reasonably represents a week’s worth of work. In the inspector’s case, the predetermined sum represented the equivalent of eight hours of work, or roughly one day’s worth of work, not a week’s worth. Given those figures, the employer’s pay practice did not represent a week’s worth of work and did not satisfy the salary basis requirement.
In reaching its decision, the court looked to a 2023 U.S. Supreme Court case with facts it deemed similar to this matter. In the earlier case, the employee, a supervisor on an offshore oil rig, received a guaranteed minimum salary of $963 for every week he worked. $963 also represented the supervisor’s daily rate and, on weeks he worked two days, he received $1,926 (or 2 x $963), three days $2,889 (or 3 x $963), etc. The Supreme Court decided that the $963 was a “high day rate” and not a weekly salary, meaning the supervisor did not qualify under the overtime exception for EAP employees.
If you have questions about whether your pay practices place your business at risk of FLSA liability, the Atlanta wage and hour attorneys at the law firm of Parks, Chesin & Walbert have answers. Our experienced team of attorneys can help employers ensure they are fully compliant with the law and can aid workers harmed by illegal pay standards. Contact us through this website or at 404-873-8048 to schedule a consultation today.