Fair Labor Standards Act: Overtime Premium Calculation
Summary: Watch out for additional payments and bonuses and how it can impact overtime payments.
In yet another decision under the Fair Labor Standards Act (“FLSA”), an employer violated the FLSA by incorrectly calculating the overtime premiums. At issue was whether oil-based mud pay and other bonuses should be included in calculating the employee’s regular pay rate.
The employees argued that the additional compensation or bonuses should be included in the regular wage rate calculation, which in turn would increase the overtime premiums paid. Phrased differently, if the regular pay rate is inaccurate, the overtime premium is as well.
The company lost. This decision underscores an important point: when bonuses and other compensation are provided to an employee, the employer should precisely determine how that impacts the regular wage rate (if at all).
Errors in the regular wage rate can create extensive employer exposure when it comes to the overtime premium. This holds especially true if the errors occurred across large segments of the workforce. The case is Meadows v. Latshaw Drilling Co. (N.D. Tex. 2018).
If your company needs any assistance, we have comprehensive experience in dealing with the FLSA and overtime issues, as well as Department of Labor Audits. Please call us at 512-481-9292 or feel free to email [email protected].
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