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Can my employer “Average” my overtime hours so that I only receive overtime compensation when I work more than 80 hours in a pay period?

August 21, 2019 by Adam Harrison

Client complaining to her lawyer regarding the litigation process.

A pattern we have seen in several of our recent cases is that some employers try to circumvent state and federal overtime laws by “averaging” the two weeks of a pay period so that their employees only receive overtime compensation when they work more than 80 hours in two weeks. This practice is illegal under the federal Fair Labor Standards Act and Colorado Wage and Hour Law.

The law prohibits employers from using an employee’s average working hours over a longer period such as a month and paying employees overtime only for the number of hours which exceed the average. If your employer tries to do this, an experienced workers’ compensation lawyer will protect your rights.

Under the Fair Labor Standards Act (“FLSA”) most employees are entitled to overtime compensation of one and one-half times their regular rates of pay for the time they work that is over 40 hours per week. 29 U.S.C. § 207. Under Colorado Wage and Hour Law, most employees are entitled to overtime compensation for any time they work over 40 hours per week, 12 hours per day, or 12 hours per shift. 7 C.C.R. 1103-1(4).

Some employers believe that they can get around the FLSA’s and Colorado’s overtime requirements by paying overtime only if employees work more than 80 hours in a two-week pay period. An example of when this might occur is as follows:

Tanya works as a dental assistant at a fast-paced dental practice. During the first week of October, her employer asks her to work long hours, including 13 hours on Monday and Tuesday, and 10 hours on Wednesday, Thursday, and Friday (a total of 56 hours). The next week, the employer only schedules Tanya to work 12 hours on Monday and Tuesday. When Tanya receives her paycheck, it says that she worked 80 hours (which is true) and did not work any overtime (which is false). The employer only pays Tanya her regular rate for all of the hours that she worked.

In this example, the employer has violated the FLSA and Colorado Wage and Hour Law by failing to pay Tanya overtime compensation for the 16 hours she worked over 40 the first week. Additionally, the employer violated Colorado Wage and Hour Law by failing to pay Tanya overtime for the two hours she worked over 12 per day on the first two days of the first week. The employer owes Tanya an overtime premium of one-half her regular rate of pay. It also owes Tanya “liquidated damages” under the FLSA, and it may be liable for statutory penalties, willfulness penalties, attorney’s fees and court costs.

While some people may shrug off such a violation as a minor issue, failing to pay overtime compensation is wage theft, pure and simple. For nearly a century, the people of the United States have agreed that an employer who wants its employees to work long hours must make a choice: either pay the employee a premium for the time they are spending away from their homes, families, hobbies, communities, etc. or hire more employees (generally benefitting the economy). An employer who seeks to game the system by getting extra work from their employees but withholding the overtime compensation to which they are entitled is committing an immoral act that is harmful to everyone.

Both the FLSA and Colorado Wage and Hour Law contain multiple exceptions, some of which are quite technical and/or complicated. If you have any questions about whether you or someone you know is covered by the overtime laws, or if you or someone you know is not receiving the overtime compensation to which you are entitled, please feel free to contact our wage and hour attorneys.

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