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News | Sep 14, 2012

“Day-Rate Employees Entitled to Overtime Pay”

Many workplace advocates and Trial Lawyers assume that only “hourly” employees are entitled to time-and-one-half overtime pay for hours worked over 40 in a workweek.  It’s time to bust this myth.  In fact, the right to overtime pay extends to all kinds of employees who are not paid on a traditional hourly basis.

For example, many employees are paid a fixed amount per day.  These “day-rate” employees are especially common in the construction, landscaping, and natural gas industries.  Many of these employees assume that, because they are paid by the day, it does not matter how many hours they work during the week.  In fact, in many of these industries, the Boss does not even keep track of the hours worked by the employee.  This lack of recordkeeping perpetuates the employee’s mistaken belief that no extra overtime pay is due.

Under the federal overtime laws and regulations, most day-rate employees are entitled to extra overtime pay. See generally 29 C.F.R. § 778.112.  In order to figure out the amount of extra overtime pay due to a day-rate employee, we need to convert the employee’s day-rate into an hourly rate by dividing all the pay received during the week by all the hours worked during the week.  The employee is then entitled to an extra payment equaling one-half of the regular hourly rate for every hour worked over 40 during the week.

I know this is pretty confusing, so here’s an example:  Joe works in the northern tier of Pennsylvania for a natural gas company.  He is paid $150 for every day worked.  The seven-day workweek runs from Sunday through Saturday.  Joe does not work on Sunday or Saturday.  But he works the following hours on Monday-Friday: Monday = 9 hrs.; Tuesday = 11 hrs; Wednesday = 6 hrs; Thursday = 13 hrs; Friday = 9 hrs.  Because Joe worked five days during the week, the Boss pays him $750 ($150 X 5 days).  However, Joe is entitled to an extra overtime payment because he worked over 40 hours during the workweek.  Specifically, Joe worked a total of 48 hours (9 + 11 + 6 + 13 + 9) during the week.  He is entitled an extra overtime payment for eight hours.

Based on the above, here’s how Joe’s extra overtime payment is calculated: [$750/48] X .5 X 8 hrs.  Put differently, the Boss owes Joe an extra overtime payment of $62.50.

Many of our Trial Lawyer and community activist friends who receive this Newsletter are too busy focusing on their own practice areas to delve into complicated FLSA regulations.  If you fall within this category, it’s OK to put away your calculator.  Just remember one thing:  day rate employees are entitled to extra overtime pay when they work over 40 hours in a week.

If you encounter a current or former day-rate employee who might not have received extra overtime pay, be sure to give us a call.  We would be delighted to evaluate the situation and, if appropriate, file suit in federal court.  As so many of you know, we always pay a fair referral fee.

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