Whether you are an employer or an employee, it is important to recognize that the Fair Labor Standards Act imposes several limitations on an employer’s pay practices, and employers can run afoul of the law (and its accompanying regulations) in many ways. If you have questions or have identified a policy that may be illegal under the FLSA, do not delay taking the next step, which should include consulting an experienced Atlanta wage and hour lawyer.
Accurately calculating overtime compensation is one area where many employers encounter problems. If an employer pays its non-exempt employers a single, universal hourly rate, calculating overtime compensation can be relatively straightforward, amounting to 1.5 times that hourly rate multiplied by the number of hours worked over 40.
Some employers do not pay workers in that way. They may pay their employees “by the piece,” which is a performance-driven form of compensation that pays based on the number of tasks a worker completes. They may also pay workers a flat rate for each day (or week) worked.
Employers that pay a flat rate or pay by the piece should be mindful that non-exempt employees can still qualify for overtime pay. To complete this calculation, an employer must find the worker’s regular hourly rate, and then pay 1.5 times that amount for each overtime hour the employee worked. 29 CFR Section 778.112 says that a flat-rate employee’s “regular rate is determined by totaling all the sums received… in the workweek and dividing by the total hours actually worked.”
A recent federal case from nearby Florida looked into overtime pay and flat-rate compensation models.
The employer, a freight company, knew its delivery truck drivers’ daily hours fluctuated, and drivers often worked more than eight hours. The employer’s “best” driver worked “an average of twelve (12) hours per day,” according to the federal district court in Tampa. The employer, though, did not track drivers’ overtime. Regardless of the hours a driver worked on a given day, he/she always received $200 for that day’s work. The only exception was when the driver performed extra work known as a “special,” for which he/she received a flat $25 (regardless of the time involved.)
As an initial matter, it is important to understand the proper way to calculate a regular rate of pay in this type of situation. It requires including both the daily rate and the specials to reach an accurate result. (If, for example, the driver worked 42 hours across five days — and completed two specials — his regular rate would be $1,050 divided by 42, or $25. Simply dividing $1,000 ($200 times five days) by 42 would yield an incorrectly low rate and create a potential FLSA violation.)
Liquidated Damages and Proof of ‘Good Faith’
The employer used something called “Dispatch Tracking,” which kept a log of the time the drivers spent on their routes, but did not use those statistics to keep track of overtime hours or calculate overtime pay. The employer’s failure to take that step allowed an underpaid driver to collect both actual and liquidated damages.
Many unpaid overtime cases involve awards of liquidated damages that equal the amount of actual damages. The law, however, gives the court the option to reduce or eliminate a liquidated damages award if the employer “acted in good faith . . . on a reasonable belief that its conduct was in compliance with the FLSA.”
The court declined to find that the trucking company operated in bad faith, but also concluded that the employer fell short of displaying the sort of good faith needed to reduce liquidated damages. Good faith requires “reasonable grounds [for an employer] to believe it was in compliance” with the law, which this company did not have.
FLSA compliance involves many facets, including proper analysis of pay practices to spot potential problems, carefully documenting compliance steps to demonstrate good faith, and more. If you have questions about your company’s compliance (or your employer’s compliance,) get the answers and advice you need by reaching out to the knowledgeable Atlanta unpaid overtime attorneys at the law firm of Parks, Chesin & Walbert. Our team has an in-depth awareness of all the FLSA’s requirements and nuances. Contact us today at 404-873-8048 or through this website to schedule a no-cost consultation to find out more.