Thursday, April 9, 2015

FLSA Work Week

As everyone who has ever been on the wrong side of a Fair Labor Standards Act overtime case knows, one of the issues that typically arises when an employee asserts that he or she was not paid overtime is when the employee’s “workweek” begins and ends.  This begs the question:  What is a work week?  

In Johnson et al. v. Heckman Water Resources et al., No. 13-40824, 5th Cir., 2014, the court held that it is the employer who determines what the “workweek” shall be.  The employees in Johnson contended that their workweek should be Thursday through Wednesday since they worked those days.  Since the employees worked 12 hour shifts for 7 consecutive days and the employer was on a 2 week pay cycle, this would have resulted in approximately 40 hours of overtime during each pay cycle for each employee.  The employer had an established workweek which began on Monday and ended on Sunday and it paid its employees bi-weekly. 
The FLSA does not define the term “workweek”, but instead requires that an employee’s workweek is a fixed and regularly recurring period of 168 hours based upon 7 consecutive 24 hour days.  The Act does not require that those 7 days coincide with a calendar week.  The Act allows for the 7 day period to begin on any day and at any hour of the day.  The Act does require that, once the workweek is set, it must remain fixed, however the workweek may be changed from time to time, but only if the change is intended to be permanent and is not for the purpose of avoiding overtime.

The Johnson court held that the language in the Act clearly provides the employer with the authority to determine the “workweek.”  The court further held that splitting work between workweeks does not violate the Act, and employers are not required to begin the workweek on any particular day.  Most importantly, the court specifically held that the “…mere fact that an established workweek does not maximize an employee’s overtime compensation does not, standing alone, violate the FLSA.”

Other than the fact that this is the rare case that actually favors employers, the important thing to take from this case is that you, the employer, have the right to set your “workweek” and you should exercise that right.  In the Johnson case, the proper exercise of the employer’s right to determine the “workweek” saved the company thousands of dollars in overtime payments.  Instead of 40 hours in overtime per pay period, the employer ended up paying 4 hours per pay period. 

Clearly, all employers should review their overtime payments and if they are significant, evaluate their definitions of the “workweek” to determine whether or not savings are available.  Remember, you can change your “workweek” provided that the change is a) permanent, and b) not designed to evade the overtime requirements of the FLSA.  Since the court has held that you don’t have to take any action to maximize employees’ overtime, taking affirmative action to reduce overtime costs is perfectly acceptable.  Remember, if you have any questions about this potential cost saving opportunity, don’t hesitate to contact your employment counsel.