While various state wage laws and contract terms may regulate whether an employee is paid for all of their time worked, the Fair Labor Standards Act specifically establishes and enforces minimum wage and overtime obligations. The line between the two can become blurry when an employee claims that they were not paid at all for specific work time. So, does an Illinois employee who claims that they worked 30 hours in a week but were only paid for 28 of those hours have an FLSA claim because they were not paid at least minimum wage for two hours of work in that week?
Recently, the 7th Circuit Court of Appeals held that the proper test for a minimum wage claim is not whether the employer paid the employee the usual rate of pay or even the agreed upon rate of pay for all hours worked in a week, but rather whether the average rate of pay for all hours worked meets or exceeds the minimum wage rate. In Hirst v. Skywest, Inc. the plaintiffs were a putative class of flight attendants. They filed suit under the FLSA claiming that the company only paid them for their hours spent in the air and did not pay them for their work time on the ground. The court, in dismissing the claim, adopted the rule that an FLSA violation for minimum wage only occurs when an employee’s weekly average wage rate is below minimum wage. In this instance, the plaintiffs earned an hourly rate of pay such that, even when averaged out over more hours than they were actually paid, it exceeded the minimum wage rate. In other words, an employee who is paid $20.00 an hour but is only paid for 28 of the 30 hours that they worked in a week does not have an FLSA claim because their average hourly rate for the week of $18.66 is still greater than the minimum wage requirement.
The adoption of the average weekly wage rate calculation by the 7th Circuit does not give employers a shield in not paying workers for extra time worked. While this may preclude a federal FLSA claim, state wage laws, such as the Illinois Wage Payment and Collection Act, enforce employee claims that they were not paid for all hours worked. Employers should always be aware of their obligation to pay all wages earned in a timely manner.
Wage and hours laws can be complicated. The labor and employment attorneys at Ancel Glink can assist you with ensuring that your pay policies and practices comply with federal and state law and defend you if a pay dispute arises. Contact Margaret Kostopulos or Bob McCabe at 312-782-7606 to discuss your needs or email us at firstname.lastname@example.org or email@example.com.