labor lawAdivision of labor law center

Slick maneuvers by employers to artificially lower the hourly wage for straight time and thereby avoid overtime are being regularly rejected in court.

The 5^th Circuit Court of Appeals recently ruled that virtually every payment made to an employee during the first 40 hours of work must be figured into the employee’s “regular hourly rate” for overtime. When a worker puts in more than 40 hours in the payroll week, he or she must be paid 1.5 times the “regular hourly rate.”

Recent court rulings show that state and federal agencies are getting tough with employers on wage and hour issues, including misclassifying employees as independent contractors, exempt status and now overtime.

In the most recent case, when United Technisource Inc. or UTI hired Timothy Gagnon, a highly skilled aircraft painter, the prevailing wage for that job was $18.00 per hour. Yet, UTI offered Gagnon just $5.50 per hour, with a $12.50 per hour per diem, up to $500 total. The per diem caps out at exactly 40 hours in the payroll week. UTI further offered Mr. Gagnon $20 per hour for hours in excess of 40 hours per week.

When Gagnon eventually filed a wage complaint for unpaid overtime, the company argued that the law required only $5.50 x 1.5 = $8.25 per hour overtime, and Gagnon was being paid almost three times that amount. A lower court found for the company.

However, the court of appeals disagreed. The judges found that if Mr. Gagnon worked (more…)