Use of fluctuating workweek method to pay overtime must have a fixed salary
A class of equipment operators and trainees has asked a federal court to approve a $1.35 million settlement of their FLSA class action lawsuit alleging the company did not fairly pay them their wages and used a gimmick to avoid doing so. The case is entitled Elliott v. Schlumberger Technology Corp. et al., and was filed in federal court in the District of North Dakota.
The plaintiffs alleged that the company violated the law by paying them under the “fluctuating workweek” method. Interestingly (or maybe not so much), the settlement talks took place after U.S. District Judge Ralph R. Erickson granted the company’s motion to decertify the class. The Judge ruled that there was insufficient evidence to show that the workers were similarly situated. There are 138 people in the class.
The plaintiffs alleged that the company paid equipment operators and trainees by the fluctuating-workweek (FWW) method. That method allows employers to pay workers overtime at a half-time, as opposed to time and one-half, but certain conditions must be met. The workers claimed that in order to validly use this method, the employees must be paid on a fixed salary, which they were not.
The court had conditionally certified a collective class of equipment operators, trainees and other similar employees who were employed at the company plant in Williston, N.D., and to whom the company applied the fluctuating workweek method for at least one week during the three years preceding the lawsuit.
This case presents a valuable lesson. Attempted use of the FWW method of payment must have the employees receiving a fixed salary and an agreement, in advance of the work, that the employees understand what the payment arrangements and overtime protocols are going to be.
This allows the employer to pay half time for overtime instead of time and one-half. Without these two requirements being met, any attempt to use the FWW method is doomed to failure. Put differently, the FWW method can be the employer’s best friend, if done right.
If not, it is the employer’s worst enemy…
This article originally appeared on the Fox Rothschild website. The information in this legal alert is for educational purposes only and should not be taken as specific legal advice.