On March 6, 2013, the U.S. Court of Appeals for the Eleventh Circuit issued an opinion in the case of Lamonica, et al v. Safe Hurricane Shutters, Inc., et al, Case 11-15743.  This was an action brought by nine plaintiffs who installed hurricane shutters for the defendant who claimed that the defendants had failed to pay them at one and one half times their regular rate for work in excess of forty hours a week.  The case had been tried before a jury, resulting in an award of damages to the plaintiffs.  The defendants then appealed to the Eleventh Circuit.

Finally, the defendant argued that the jury had miscalculated the damages owed to the plaintiffs.  In cases where an employee is paid by the hour, it is relatively simple to determine the overtime rate, i.e., one and one half times the regular hourly rate.  In cases where the pay is by something other than hourly, (e.g., salary, commission, piece work, etc.) the overtime calculation is more complex.  The plaintiffs in this case were salaried workers, i.e., they were paid the same amount regardless of the number of hours they worked each week.

One method of calculating overtime pay for salaried workers is called the “fluctuating workweek method.”  Under this method, the employee’s regular hourly rate is determined on a week by week basis by dividing the salary paid by the number of hours worked.  If the employee worked 50 hours in a week, for example, and her salary for that week was $500.  The fluctuating workweek method would produce a regular rate of $10 an hour (500/50) and an overtime rate of $15 an hour (10 x 1.5).

There are two significant disadvantages with the fluctuating workweek method.  First, the formula produces a smaller regular rate and correspondingly a smaller overtime rate with every hour worked.  If, for example, our $500 a week employee worked 60 hours in a week, her regular hourly rate would be $8.33 (500/60).  Her overtime rate would then be $12.50 (8.33 x 1.5).  Assume further that the employee worked a different number of hours each week.  Her regular rate and her overtime rate would then also be different each week.

The second disadvantage of the fluctuating workweek is the remedial effect.  The fluctuating workweek method assumes that the employee has already been paid a legal regular rate for every hour worked.  The remedy that she is entitled to, therefore, is the difference between the amount that she was paid and the amount that she should have been paid.  If she has already been paid $10 an hour for every hour worked, therefore, her remedy is payment of an additional $5 an hour for every overtime hour worked.  Under the fluctuating workweek, therefore, an employee who works a 50-hour week for a $500 salary would be entitled to an additional $50 in back pay and $50 in liquidated damages.

The fluctuating workweek method is not the only method for determining the amount of damages owed to a salaried worker in an FLSA overtime case.  In lieu of the number of hours worked, a court could also determine the regular rate based on the number of hours that the salary was intended to compensate.  In the case of our $500 a week employee, for example, assume that her salary was only intended to cover 40 hours a week.  In that case her regular rate will be $12.50 and her overtime rate will be $19.25.  Using this method, there is assumption is that the employee has not been paid at all for her overtime hours.  Ten hours of overtime would thus yield a remedy of $192.50 in back pay and $192.50 in liquidated damages.

The defendants in Safe Hurricane Shutters argued that the lower court had erred by failing to apply the fluctuating workweek method.  The Eleventh Circuit disagreed, finding that “the fluctuating workweek method is not the only or even the default method for calculating damages when an employee is paid a weekly salary.”  Instead, the court held that “the number of hours that the employee’s pay is intended to compensate – not necessarily the number of hours he actually works – is the divisor.”

On March 6, 2013, the U.S. Court of Appeals for the Eleventh Circuit issued an opinion in the case of Lamonica, et al v. Safe Hurricane Shutters, Inc., et al, Case 11-15743.  This was an action brought by nine plaintiffs who installed hurricane shutters for the defendant who claimed that the defendants had failed to pay them at one and one half times their regular rate for work in excess of forty hours a week.  The case had been tried before a jury, resulting in an award of damages to the plaintiffs.  The defendants then appealed to the Eleventh Circuit.

Next, the individual defendants argued that it was wrong to hold them personally liable for damages.  The court dismissed that argument in short order, noting that the FLSA defines an “employer” in part as “any person acting directly or indirectly in the interests of the employer in relation to an employee.”  The court stated, “our primary concern is the supervisor’s role in causing the FLSA violation.”

On March 6, 2013, the U.S. Court of Appeals for the Eleventh Circuit issued an opinion in the case of Lamonica, et al v. Safe Hurricane Shutters, Inc., et al, Case 11-15743.  This was an action brought by nine plaintiffs who installed hurricane shutters for the defendant who claimed that the defendants had failed to pay them at one and one half times their regular rate for work in excess of forty hours a week.  The case had been tried before a jury, resulting in an award of damages to the plaintiffs.  The defendants then appealed to the Eleventh Circuit.

Defendants first argued that the plaintiffs should be barred from recovering overtime pay as a matter of law on the basis of a legal doctrine known as in pari delicto.  This doctrine generally bars recovery to a plaintiff who had participated in the wrongdoing that is the basis of the lawsuit.  Defendants argued that the plaintiffs had failed to report their income to the Internal Revenue Service; had used false social security numbers and were, in fact, undocumented immigrants who were not authorized to work in the USA.

The Eleventh Circuit was not impressed.  It affirmed its prior holding in Patel v. Quality Inn S., 846 F.2d 700 (11^th Cir. 1988) wherein it found that undocumented aliens were “employees” who may recover unpaid wages under the FLSA.  The court further found that the in pari delicto argument was unpersuasive because none of the plaintiffs had cooperated with the defendants in violating the FLSA.  The court found that tax reporting and false social security number issues did not have a sufficient causal relationship with defendants’ FLSA violations.

Some employees are reluctant to pursue their rights under the FLSA because they fear that the employer will retaliate by firing them or retaliating against them in some other material way.  The FLSA, however, contains a strong anti-retaliation provision.  Requesting overtime, pursuing a grievance over overtime and filing a lawsuit over overtime are examples of conduct that is protected by the FLSA.  An employer who takes action against an employee because of his or her legally protected conduct often increases its exposure to include equitable remedies as well as compensatory and punitive damages.

If you have questions about the Fair Labor Standards Act, call the FLSA experts at DeLong Caldwell Bridgers & Fitzpatrick, LLC, Charles Bridgers and Kevin Fitzpatrick, at (404) 979-3150 for a free consultation.

Some employers attempt to stop and start an employees’ work time throughout the day to correspond to the times when they are actually engaged in revenue producing activities.  Using an intermittent workday to determine compensable time can be a very expensive mistake.  As a general rule, all time within the period between the commencement and completion in the same workday of an employee’s principal activity or activities is compensable time.  It includes all time within that period, whether or not the employee engages in work throughout the period.  The only exception is for recognized breaks in which the employee is free of all duty, including the duty to respond to calls.

If you have questions about the Fair Labor Standards Act, call the FLSA experts at DeLong Caldwell Bridgers & Fitzpatrick, LLC, Charles Bridgers and Kevin Fitzpatrick, at (404) 979-3150 for a free consultation.

Some employers hire employees (usually waiters, waitresses and/or exotic dancers) on a tips-only basis.  When challenged, they often attempt to label these workers as “independent contractors”.  Courts tend to find, however, that the employer was merely trying to fly below the FLSA radar.  Employers who take this approach are often found to be liable for the full minimum wage (i.e., no application of the tip credit) overtime pay, liquidated damages and attorneys’ fees and costs.

If you have questions about the Fair Labor Standards Act, call the FLSA experts at DeLong Caldwell Bridgers & Fitzpatrick, LLC, Charles Bridgers and Kevin Fitzpatrick, at (404) 979-3150 for a free consultation.

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record-keeping and youth employment standards for workers in the private sector and government.  Covered non-exempt workers are entitled to overtime pay of at least 1.5 times regular pay if they work more than 40 hours per week.

Auto Deducting Lunch and Other Breaks.

Many employers track employee work time through the use of computerized systems.  Some employers program their computers to deduct a one hour lunch period each day, whether or not the employee actually takes a lunch break of that duration or any lunch break at all.  If you are not actually relieved from duty during an auto-deducted lunch break, the auto- deducted time should be added back in in order to determine if you have cleared the forty hour weekly overtime threshold.  If the employee is never allowed to take a lunch break and the time is nevertheless auto-deducted, the employer may face substantial exposure for backpay, liquidated damages and attorneys’ fees.

Reality trumps under the FLSA. If you work through a break, you must be paid for it.

If you are an employer or an employee and have questions about the Fair Labor Standards Act, call the FLSA experts at DeLong Caldwell Bridgers & Fitzpatrick, LLC, Charles Bridgers and Kevin Fitzpatrick, at (404) 979-3150 for a free consultation.  For more information, check out our publication,  Are You Entitled to Overtime Pay?

From a DOL press release:

“An ongoing enforcement initiative conducted by the U.S. Department of Labor focused on the restaurant industry in Massachusetts has uncovered significant violations of the minimum wage, overtime and record-keeping provisions of the Fair Labor Standards Act. To date, investigations by the Boston District Office of the department’s Wage and Hour Division have found $1,307,808 in back wages due to 478 employees of multiple establishments. In addition, the division now is assessing liquidated damages, payable to employees, when employers are found in violation.

. . . .

Our investigations found that several restaurants violated the FLSA by paying employees flat salaries for all hours worked without overtime pay, failing to combine hours worked at multiple locations for overtime purposes, paying incorrect overtime rates to tipped employees, making illegal deductions from employees’ wages and failing to keep accurate records of employees’ hours," said George A. Rioux, the division’s district director in Boston. "Even more serious, our investigations found an emerging trend of misclassifying restaurant workers as independent contractors in order to avoid minimum wage, overtime and record-keeping requirements of the FLSA."

We see the same problems in Georgia. Managers and Owners can be  held individually liable for violations of the FLSA. We can review your policies and procedures to insure that you stay within the law.

In agreement with strong 11th Circuit (the U.S. Court of Appeals that covers Georgia) precedent,   the Court in Enriquez v. Cherry Hill Market Corp. approved a collective action notice that specifically informed potential opt-ins that  they may be “owed payment” even if they were “paid in cash and regardless of their immigration status.”  The FLSA protects all workers regardless of immigration status.