Florida Statewide representation of Unpaid Overtime and Wage Dispute Cases
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The Fair Labor Standards Act (FLSA) obligates all employers to pay it’s employees overtime pay, at a universally recognized rate of “time and a half”(1.5 times regular rate) for each and every hour worked over and above forty (40) hours per work week. There are some exemptions to this rule, sometimes employers are known to unlawfully abuse the “administrative” or “outside sales” loopholes.
Florida employers that pay their employees a fixed salary every workweek for hours that vary from week to week is commonly referred to as the fluctuating workweek method of pay where the employer may use a method of overtime pay known as the “half-time” method or more informally recognized as “Chinese Overtime.”
So, just what do these terms mean to you? Basically, the more your work, the less you end up making per hour. How is this legal? Well first of all, most people paid like this have no idea that’s what their employer is doing. Under the Fair Labor Standards Act this is a perfectly legal way of paying employees, as long as it is agreed to before hand, because a fixed salary is paid whether an employee works 25 hours or 50 hours in a workweek, which is known as straight time, so any overtime hours worked, are paid at “half-time” and not time and a half. When an employee works more than 40 hours in a workweek, the fixed salary is divided by the total hours worked to determine the regular rate of pay. Basically it boils down to this: an employee is paid straight time essentially through the fixed salary, and since straight time is paid only once, any overtime is calculated at half of the regular rate of pay, which virtually establishes a pay of time and a half for the employee.
“Chinese Overtime” can best be explained through an example. Let’s say Jimmy, an employee paid by the fluctuating workweek method, is paid a fixed salary of $600/week and works 40 hours and receives $15 per hour. But, when Jimmy works 50 hours/a week he winds up receiving $12 per hour under “Chinese Overtime” law ($600/50). The overtime rate ends up being 1.5 x $12 instead of 1.5 x $15. If Jimmy were to work 60 hours in a workweek, his overtime rate would be calculated as 1.5 x $10 (400/60 = $10). In weeks where the overtime is elevated, the regular rate will be low and more beneficial to the employer. When work is slower, and the employee works 40 hours or less, the fixed salary must still be paid. While this can be viewed as unfair, it is still legal.
Not just any employer can use this method of pay. There are certain requirements that MUST be met, including:
1.) A mutual understanding must take place between an employee and his or her employer so that it is made clear that the employee’s fixed salary will encompass all hours worked in a workweek, considered straight-time compensation, even when the total hours worked are small.
2.) The employee cannot be on a fixed schedule, the hours worked must fluctuate depending on the workweek.
3.) With very little room for exceptions, a reduction in salary cannot be made for workweeks that are short.
4.) The regular hourly pay rate used to calculate the half-time overtime rate must never fall below minimum wage.
Unfortunately, many employers that formulate their employees pay based off of the fluctuating workweek method make errors, and as a result, can end up owing their employees back wages. The slightest slip up can discredit the total wage configuration for all other workweeks. Here are a few examples of how an employer can violate “Chinese Overtime” Law:
1.) If an employee worked certain weeks for less than 40 hours and was not paid the agreed fixed salary.
2.) If an employee receives additional compensation, such as commission, bonus pay, holiday pay or shift pay that excludes them from being a “fixed salary” employee.
3.) If an employer and an employee did not have a clear arrangement regarding the use of the fluctuating workweek and there is no signed document, this could be a decent indication a violation has taken place.
4.) If an employee worked so many hours in a workweek and the pay rate falls below the federal minimum wage.
5.) If an employee’s work schedule does not actual fluctuate each week. A difference of an hour or two in the total number of hours worked each week is not enough of a variance to use the fluctuating workweek method of pay.
The attorneys at Whittel & Melton tend to find that numerous employees paid through “Chinese Overtime” fall victim to wage scams. If you believe that you have not been compensated adequately according to the FLSA and labor laws, we can help identify if a violation has occurred and if you have a claim. You could be entitled to back wages and damages, so contact us today for a free and completely confidential consultation.
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