Most employers pay non-exempt workers an hourly rate, say $15.00, and they pay time and a half when they work more than 40 ($22.50). What if I told you that some companies only pay ½ time (not time and a half) for overtime hours? Would you say, hey they can’t do that? Well, you might be right.
While the normal way of paying overtime is time and a half, there is a little known and little used regulation in the federal wage laws that permits half time (or less) to be paid. They call in the “Fluctuating Work Week” method of overtime pay. Sometimes you may hear it referred to as “Chinese Overtime.”
The general rules are that the employee must make a fixed salary for their hours from 1 to 40, and then they get a ½ time rate for hours over 40. It is very complicated, confusing, and usually unfair to workers.
Take this example. A worker makes $800 per week. Most would convert this into an hourly rate of $20. Overtime would then be $30 (time and a half). Under this scheme, if that worker worked 50 hours in a week, they’d only get $8 per hour or $80 total for their 10 overtime hours. Most people would believe that they should get $300.
The Fresh Market uses this pay scheme to pay its Department Heads or Department Managers. A lawsuit has been filed in Federal Court in Connecticut challenging this pay scheme. Among other things, it claims that The Fresh Market’s deferral of some of the Department Head’s compensation into quarterly and year-end bonuses violates this law. The U.S. Department of Labor in 2011 rejected attempts by employers’ lobbies to permit bonuses for employees paid via the Fluctuating Work Week. The lawsuit also claims that The Fresh Market failed to clearly explain this pay scheme to its Department Heads.
Recently, lawyers for the Department Heads have filed a motion with the court asking permission to send a notice out to Department Heads and Department Managers around the country letting them know of their rights and that they can join the lawsuit. That motion is still pending. The Fresh Market has opposed that motion, claiming that all Department Heads are different.
If the court grants the motion, Fresh Market Department Heads around the country will receive notice and a consent form that they can use to join the case. More information can be obtained by visiting the website of the Hayber, McKenna & Dinsmore.