COURT OKs “BLENDED” RATE OF PAY FOR OVERTIME

The Federal Appeals Court in Atlanta – with jurisdiction over Alabama, Georgia, and Florida – has clarified and approved a commonly used method of calculating overtime pay – a “blended” or “average” rate for employees who work at different rates of pay during a particular workweek.

DIFFERENT JOB – DIFFERENT PAY

Employees often perform at several different jobs during a work week, with each job having a different rate of pay. The US Department of Labor recommends but does not mandate, that companies calculate overtime pay based on the average hourly rate for the week. For example:

• 16 hours @ $10.00 per hour = $160
• 24 hours @ $12.00 per hour = $288
• 8 hours @ $15.00 per hour = $120
• That equals 48 hours for a total of $568
• $568/48 = $11.83 Average wage for the week
• ½ of $11.83 = $5.92
• $5.92 x 8 OT hours = $47.33 of overtime pay
• Total pay = $568 straight time + $47.33 overtime = $615.33

SAME JOB – DIFFERENT PAY

Some companies pay different rates of pay for different tasks within the same job. In this case, bus drivers earned different hourly rates depending on the routes they drove. The drivers felt that their overtime pay should be calculated at 1.5 times the hourly rate for the route they were driving at the time the overtime was being worked. They said that the US DOL recommended formula – averaging – applies only when employees are performing different jobs with varying rates of pay and not to those performing the same job with varying pay for different tasks. The Court, while noting that the DOL regulations did not expressly address the “same job” scenario, held that the same principle applied to both situations. The Court approved using a blended or average rate as shown in the example when employees are paid different rates for different tasks within the same job.

STEELWORKERS UNION VIOLATES EMPLOYEE RIGHTS

Unions like to position themselves as champions of employee rights – always fighting for the downtrodden, mistreated employee. A recent settlement approved by the National Labor Relations Board shows how one union – the United Steelworkers of America – coerced, threatened, intimidated and fined workers who dared to challenge their Union’s leaders.

The case grew out of a strike at a Goodyear Tire & Rubber plant in Akron, Ohio. After the strike had dragged on for six weeks, four union members got tired of being unemployed and exercised their federally protected rights to resign from the union, cross to picket line, and return to work. That seems simple enough. Federal law says individual employees are free to choose whether they want to work or strike.

The Union didn’t take kindly to employees who exercised their right to refrain from striking, and held a “trial” (the employees were not allowed to attend) to find the offending workers “guilty” of being “scabs.” Each employee was fined $620, and union heavies visited their homes to collect the money.

The employees filed unfair labor practice charges against the Union, and the NLRB took up their cause. The Steelworkers quickly agreed to settle – probably because they didn’t want this case to hit the news. The Union agreed to drop the fines, cease all coercion, threats, and intimidation, and behave better in the future.

LIGHT DUTY – SHOULD PAY BE REDUCED WHEN THE DUTY IS “LIGHT”?

Most companies attempt to provide temporary light duty work assignments for employees recovering from work-related injuries – a practice that is encouraged by insurers as a way of reducing workers compensation costs. Some companies, to avoid potential ADA accommodation issues, will provide such assignments only when the employee’s MD is able to project a firm date when the employee will be able to return to full duty. Others simply do not offer light or restrictive duty assignments at all. All these approaches are legal – provided that the employer adopts a clear policy and follows it consistently.

A few companies pay those on light duty assignments a reduced rate of pay to reflect the reduced responsibility and effort required. The reduced rate is set somewhere between the regular rate and the amount of the workers compensation benefits that would be paid for the injury.

An employee in Indiana recently tried to use the Family and Medical Leave Act (FMLA) to challenge this practice, maintaining that she should have been paid her regular rate, but the Federal Appeals Court in Chicago rejected her claim.

The Facts

Susan Hendricks worked for Compass Group as a utility driver servicing a route of the company’s vending machines. Her driver pay was $12.23 per hour. She experienced a rotator cuff injury on the job and was off work, with workers compensation benefits, for one week. After that, Ms. Hendricks was required to accept a “light duty” office job at $9.00 per hour – a job that was within the physical restrictions/limitations provided by her treating physician. She continued in this light duty assignment for about six months before voluntarily quitting.

After her resignation, Hendricks filed suit under the FMLA, claiming that her former employer owed her $3.23 per hour for the time she was on light duty. Her theory was that she could have applied for and taken FMLA leave to cover the one week when she was totally disabled, and the FMLA requires that a returning employee be reinstated to the same job or an equivalent job at the same rate of pay. Per Hendricks, by failing to pay her $12.23 per hour for the office assignment, Compass Group violated her FMLA reinstatement rights.

The Court’s Analysis

The court rejected her claim, noting:

• While Hendricks could have applied for FMLA leave, she did not.
• Had she taken FMLA leave, she would have had a choice (provided in FMLA regulations) to reject the light duty assignment and continue on unpaid FMLA leave until her 12 week leave entitlement was exhausted or she was released to return to the driver job, which ever came first.

SPECIAL NOTE: An employee who exercises this legal option and remains off work on FMLA leave generally forfeits workers compensation benefits.

• Since FMLA leave is unpaid, and since Hendricks was never able to return to her driver job within the maximum 12 week leave period, there was never a time when Hendricks would have been legally entitled, under the FMLA or otherwise, to be “reinstated” to a job paying $12.23.

Lessons from this case:

• Light duty assignments to special or transitional jobs with different duties from the employee’s regular job can be paid at lower rates if the pay is more than workers compensation benefits. For light duty assignments following off the job injuries, pay can be set at any level.
• Light duty assignments involving a return to the employee’s regular job with only certain tasks being eliminated need to be carefully analyzed before reducing pay. While reducing pay in these circumstances would not violate the FMLA, care needs to be taken to assure that the light duty assignment represents a substantial reduction in the skill, effort, or responsibility associated with the job – or else there could be problems under the Equal Pay Act.

WORKPLACE SAFETY – FATALITIES INCREASE FOR HISPANIC WORKERS

The Bureau of Labor Statistics and the Occupational Safety and Health Administration recently released a statistical report that highlights several national trends on workplace fatalities. Key points include:

• The number of workplace homicides continues to decrease – probably because employers have become more security conscious and have implemented more effective policies aimed at preventing workplace violence (The May 2007 Tip Sheet has a special report on workplace violence policies, including Maynard’s continuing offer of a free model policy to those interested).
• The construction industry remains the most dangerous type of work, accounting for over 21% of all workplace fatalities.
• The most frequent workplace deaths involve automobile accidents (23%), although the total number of highway deaths (1,329) was the lowest since 1993.
• The largest increase in the cause of death was fires and explosions – up 26% – and the AFL-CIO criticized OHSA for failing to adopt recommendations from the Chemical Safety and Hazard Investigation Board.
• A significant increase in the source of workplace fatalities came from falls, primarily falls from rooftops – an increase of 5%. The AFL-CIO promptly issued a statement critical of OSHA, calling falls a safety hazard that is “recognized but not addressed” by the agency.
• Hispanics recorded the largest increase in workplace deaths of any demographic group. While Hispanics represent 12% of the overall workforce, this group recorded 16% of all workplace fatalities. This raises obvious questions about safety practices among those who employ undocumented workers.

Again, the overall news was good – the rate of deaths fell to 3.9 per 100,000 workers, which is the lowest rate since 1992. OSHA Administrator Edwin G. Foulke, Jr. (a good friend of some of our lawyers) commented that while he was pleased with the trend, all workplace fatalities are tragic events.