Pepsi Beverages Company has recently joined a long list of employers who are being sued for paying what some employee’s refer to as “Chinese Overtime.” Yes, it’s not the best name for it. The proper name is Fluctuating Work Week overtime. Some refer to it as “half time” overtime. Whatever you call it, employee’s don’t like it and there are lawsuits all over the country challenging its use.
Usually, employers pay an hourly wage to their non-exempt workers and then pay one and one half that wage when they work overtime. For example, if someone makes $20 per hour, they get $30 per hour for overtime.
Well, in an ongoing effort by employers to save every nickel they can, they are now paying overtime pursuant to a rare and, many say unfair method.
They pay a salary to their employees, then, when they work say 50 hours, they divide that salary by 50 (not 40) to determine the hourly rate. They then pay ½ that rate for the overtime. For someone earning $800 per week, this means getting $80 for ten hours of overtime instead of $300.
Unfortunately, the U.S. Department of Labor allows this payment scheme but only in certain circumstances. Employees and their lawyers around the country are attacking this rule whenever they find a way.
The latest employer to use this method is Pepsi. Stephen Boyd has filed a lawsuit in the federal court in Massachusetts claiming that Pepsi is not following all the rules and therefore should not be allowed to pay ½ overtime. His lawsuit explains it all.
While the claims arise out of a collective bargaining agreement of a local union, it could be that Pepsi pays all of its BCRs this way. If so, BCRs from around the country might be able to join.