Calculating Overtime

Dollar Stores Labor Supreme Court

Marble Falls      Anytime the current US Supreme Court seems to have made a decision that favors workers, we definitely need to hope it’s a good thing, but before we do a happy dance it’s worth a hard look to see if the fine print aligns with the good news headlines.  Add to that a 6-3 decision that includes Chief Justice Roberts and Amy Coney Barrett and affirms the wildly erratic and conservative New Orleans-based Fifth Circuit Court of Appeals, then we better be damned sure it’s all on the up and up.

The headlines on the decision indicated that the Supreme Court had affirmed the Fair Labor Standards Act, which is a relief and a good thing.  Furthermore, the toplines on the story indicated that the decision allowed workers, even those well-paid, to collect overtime in certain situations, which would be a great thing.  Dollar store managers, who are routinely working 60 to 80 hours per week without overtime because they are paid above the minimum weekly salary, would be reading these headlines with interest for example, and they are not alone.

Not surprisingly, this decision is a lot more complicated and narrower.  The case was brought forward by an offshore oil worker who was paid a day rate of almost $1000 per day for a 28-day turn that then gave him 28 days off.  He was expected to work 12 to 14-hour days seven days a week, but although he made more than $200,000 per year, he didn’t get overtime, so he sued Helix Energy Solutions Group.  I read this with interest, remembering my own experience working offshore one summer after my freshman year in college.  I worked 14 on and 7 off at $2 per hour for a 12-hour day, but the way the week was broken up on the 14, I got no overtime pay on the first part, which was 36-hours, then a pile of overtime at $3.50 for the full-week of 84 hours with 44 at overtime, and then another 8 hours overtime on the 48 hours on the last four days of the shift.  In 1967, that summer paid a lot of my school bills, so I’m not complaining, and while offshore, they fed me better than I had ever eaten in my life, and there wasn’t anywhere we could spend a dime, so it was all good.

Breaking down the Court’s decision based on FSLA follows these lines:

…an exempt employee’s earnings may be computed on a daily basis without losing the exemption or violating the salary-basis requirement “if the employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of … days … worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned.” In its ruling, the Court determined that employees who are paid a daily rate – whatever the income level – must satisfy the salary-basis test set out…: 1) that the employee is paid at least $455 each week1 and 2) that the guaranteed amount computed on a daily basis “must bear a ‘reasonable relationship’ to the ‘amount actually earned.'”

In short, this decision is not a boon for all exempt employees under the FSLA, but really only those who receive a day rate and aren’t guaranteed some amount.  The company even agreed that they weren’t complying with a weekly guarantee, but they didn’t want to suck up and pay the OT, which would have been almost $1500 per hour for the overtime hours, as you can imagine.

The garbage laborers or hoppers that we represent are paid a day rate which is almost this complicated, but they are certainly not exempt workers.  Their day rate assumes a weekly minimum number of days worked regardless of the hours in each day, and then something quaintly called “Chinese overtime” if their hours exceeded 40 at time-and-a-half of what would have been the hourly rate in the contract.  Since they are classified as temporary workers, there is no weekly guarantee.  If you’re not confused by this, you’re the only one!

In short, none of this helps them, and likely none of this really helps low-level managers who are being exploited under the current standard for exempt workers since they are still making a weekly salary and don’t have a day rate.  That’s a case still waiting, but with long odds.  In the meantime, watch your hours and overtime, just in case there’s a break in the clouds in the future on some sunny day.