Half Time Overtime Pay in Connecticut
Most people know that overtime pay is time and a half. So, if you make $20 per hour, you should get $30 when you work more than 40 hours per week.
Well, there is another way of paying overtime, and it is growing in popularity. It has many names. It is sometimes called the Fluctuating Work Week method of overtime pay. Sometimes it is called “half-time” over time, for reasons that you will soon see. Sometimes it is called “Coefficient Overtime” pay, and sometimes it is called “Chinese Overtime,” though it has no apparent connection to China.
The Hayber, McKenna & Dinsmore is suing GNC for violating wage & hour laws by paying its Store Managers half-time overtime.
Recent Change in the Law:
The Hayber, McKenna & Dinsmore recently won a Connecticut Supreme Court ruling that has made half time overtime illegal in some situations in Connecticut.
Employees who receive commission, and work in the ‘mercantile trade’ (employers who sell commodities like retail) are entitled overtime pay calculated by dividing their total weekly pay by their usual number of hours – not their total hours. This means more overtime pay for these Connecticut workers.
If you work have been getting half time overtime and work in the mercantile trade, you may have been underpaid.
How It Works
First, it only applies to “non-exempt” or overtime, eligible employees. Next, the employee is paid a “fixed weekly salary.” This means that they get that weekly pay, say $800, no matter how many hours they work nor how few. So, if they really only work 25 hours one week, then they should still get their $800. Finally, when they work overtime, say 50 hours in a week, they get half-time pay. You divide the salary of $800 by 50 and come up with an hourly rate of $16. Then you get one-half that rate, or $8, for the ten overtime hours. Your overtime pay in that week would be $80.
This pay is significantly less than if you were paid $20 per hour, since in that case you’d get $30 for your ten overtime hours, or $300.
The obvious downside of this pay system is that employers get to pay a very low overtime rate and almost never pay the weekly salary for a short week of work. We’ve been representing employees in this area for over a decade and they are almost always scheduled for at least 45 hours per week and rarely work less than 40. This system, when applied cleverly by employers, lets them pay a very small overtime premium and get away with it.
Is it legal?
We get asked this question all the time. In the federal system, there is a regulation which permits this pay system as long as the employer obeys all of the law’s strict requirements. Some states don’t allow it at all. Connecticut has a regulation regarding employees in the “mercantile trade” (basically, merchants, or businesses that sell things), that says that the employer “shall establish a regular hourly rate.” We think that “hourly” means hourly and that a “fixed weekly salary” like is used in the FWW is against this regulation.
What should I do if I am paid this way?
Check to see if you have ever been docked. This is a big “no-no” in this method. If the employer is docking you when you don’t work 40, you may have a claim. Sometimes, employers pay too much and violate the “fixed weekly salary” component. One employer, we are suing pays 8 hours of Holiday pay along with the hourly wages and that can result in the employee receiving more than the fixed weekly pay. A judge in New Jersey recently ruled that such a pay system is invalid in a case against Office Depot.
If you think your employer is engaged in this practice, fill out our online form so we can review your case.