DOL: Employers failed to include shift differentials in overtime calculations
- Two employers — a Pennsylvania healthcare provider and a Connecticut lighting manufacturer — have entered into settlement agreements with the U.S. Department of Labor (DOL) after allegedly incorrectly calculating workers' overtime payments, in violation of the Fair Labor Standards Act (FLSA). The Pennsylvania employer was on the hook for $39,704 in back wages and damages to 92 employees; the Connecticut employer, $138,753 to 829 employees.
- The employers paid less overtime than was due because they failed to include shift bonuses and shift differentials when computing overtime pay. Both employers also failed to maintain accurate time and payroll records, as required by law.
- The FLSA requires that covered nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and a half for hours worked beyond 40 in a given week, though many states and municipalities have more stringent requirements.
Employees covered by the FLSA, unless exempt, must receive overtime pay for hours worked beyond 40 in a workweek at a rate not less than time and one-half their regular rate of pay. Different workweeks may be established for different employees or groups of employees, but averaging hours over two or more weeks is not permitted.
The "regular rate," which seemingly tripped up the two employers involved in the recent settlements, generally includes all remuneration, with just a few exceptions. Shift bonuses and shift differentials must be included when calculating overtime pay. Earlier this year, the 4th Circuit shot down a "blended rate" that used a single rate for all hours worked, both overtime and non-overtime hours.
DOL is in the process of amending the regulations that explain how employers must calculate workers' regular rate of pay for FLSA purposes, which would correspondingly affect the calculation of overtime pay. A Notice of Proposed Rulemaking is expected any day.
- U.S. Department of Labor Wage and Hour Division Overtime Pay