Court of Appeals for the Fifth Circuit affirmed the lower court’s determination that a staffing company
violated the Fair Labor Standards Act (FLSA) when it failed to include
a per diem payment in its “regular rate of pay” calculation.
Pursuant to the
FLSA, all non-exempt employees must be paid at a rate of one and one half times
their regular rate of pay for all hours worked in excess of 40 hours in
any workweek. “Regular rate” is defined under the act as “all
remuneration for employment.” The overtime rate then become s a
mathematical computation based on a factual determination.
In Gagnon v. United Technisource, Inc. an employee – a skilled craftsman
– was paid $5.50 per hour plus a $12.50 per diem per hour payment
by a staffing company. The typical rate of pay for his position was as
much as $24 per hour.
The lower court acknowledged that in some instances per diem payments are
not included in the regular rate of pay analysis. In this instance however,
the court was suspicious that the payment schedule was designed to circumvent
overtime laws. A skilled craftsman typically earns 3-4 times the rate
of pay offered by the staffing company. The court noted that they were
“troubled by the fact that the combined ‘straight time’
and ‘per diem’ hourly rates matched the prevailing wages.”
The court likened this fee arrangement to other situations where employers
artificially lower an employee’s regular rate of pay as a bonus
in order to avoid paying a premium for overtime work.
As a result, the lower court held it was a violation not to include the
per diem payments as part of the “regular rate of pay” calculation.
The 5th Circuit affirmed.
Overtime premiums can be a great source of extra income to employees. However,
in order to avoid paying employees the total compensation due, some employers
and companies try to alter how overtime is calculated. In most cases when
an employer mischaracterizes your rate of pay, they have violated the FLSA.
If you believe you have been denied overtime compensation, please contact
The Buckley Law Firm, LLC, a Georgia law firm dedicated to employee’s rights.