Atlanta Employment Attorneys Blog
Employers have several tools at their disposal to cut costs, including the expenses that go with paying their workers. The law gives employers considerable latitude in modifying workers’ pay if those workers have begun putting in longer hours but, as any knowledgeable Atlanta unpaid overtime lawyer can tell you, when an employer cuts a worker’s regular rate of pay in an artificial way that’s designed to get around complying with the overtime rules of the Fair Labor Standards Act, that a violation of the law.
One potential way an employer can run afoul of the statute is to create two different “regular” rates of pay, with the goal of using the lesser of the two as the basis for calculating overtime pay, thereby artificially depressing the amount of overtime compensation the workers would receive.
That’s what one security guard alleged in his FLSA lawsuit against his employer. When the guard started his employment, the employer paid him $13 per hour and the guard worked 40-hour weeks.
In early 2019, however, the guard began working significant amounts of overtime — typically “twenty or so” hours each week. A few months later, the employer cut the guard’s regular rate of pay to $11.15 per hour. In 2020, the guard’s overtime assignments ended and, at the same time, the employer raised his regular back to $13 per hour.
According to the guard, the $11.15 figure was no accident. On those weeks when the guard worked 60 hours, he received 40 hours of regular pay and 20 hours of time-and-a-half overtime in accordance with the FLSA. That worked out to be $446 of regular pay and $334.50 of overtime pay, for a total of $780.50. (Allegedly not coincidentally, $780.50, when divided by 60, yields an overall average of… $13.01.)
‘Bona Fide’ Modifications of a Regular Rate…
This case raises a few key points worth highlighting. On the one hand, the FLSA does all employers to reduce a worker’s regular rate of pay as long as it occurs in a “bona fide” way.
Back in the mid-1940s, the U.S. Supreme Court declared that as “long as the minimum hourly rates established by Section 6 are respected, the employer and employee are free to establish [the] regular rate at any point and in any manner they see fit,” with a few exceptions.
…Versus Obviously Artificial ‘Bookkeeping Devices’
The employer, for example, cannot “compute the regular rate in a wholly unrealistic and artificial manner so as to negate the statutory purposes” of the FLSA. That includes not lowering the worker’s pay when he/she works overtime and raising it when he/she does not. When an employer does that, the regular rate modification is an “obvious bookkeeping device” and an impermissible artificial method (to dodge the requirements the statute imposes.)
The security guard had sufficient evidence of “prohibited arithmetic” in his case. When he started (and worked 40 hours per week,) his regular rate was $13. Once the employer ended his overtime assignments in 2020, it returned to $13. For much of the time when the guard worked roughly 60 hours per week, the employer paid him a rate that resulted in the guard receiving roughly $780 of pay for those 60 hours, or a $13 average. That was enough to create a viable claim of overtime avoidance.
Unfortunately, illegal tactics designed to get around paying workers all that the law says they’re owed are fairly common in the workplace. Whether you’re an employer seeking to ensure that your pay practices are compliant with the law, or you’re a worker who believes that you got illegally shortchanged on overtime pay, you should talk to the experienced Atlanta unpaid overtime attorneys at the law firm of Parks, Chesin & Walbert to get the reliable answers you need. Our team has an in-depth knowledge of the FLSA, its regulations, and requirements… and all the nuances that go along with them. Contact us through this website or at 404-873-8048 to schedule a consultation today.