In a lawsuit recently filed in Connecticut Superior court, a man is challenging his employer’s practice of paying overtime wages pursuant to what it called “chinese overtime.”
In Roach v. Moran Foods, Inc., an assistant manager complains that the company did not pay time and a half for his overtime hours. Instead, the company calculates overtime premiums based on the federal “fluctuating work week” method of overtime calculation. A federal regulation, under certain circumstances, permits employer to calculate overtime by dividing the salary by the number of hours actually worked – say, 50 – rather than 40.
For example, an employee who is paid $800 per week and works 40 hours, has a regular rate of pay of $20. In a week in which he works 50 hours, the regular hourly rate is calculated by dividing by 50 ($800 / 50 = $16). Overtime is then one and a half times $16 or $24. Well, if you’ve been paid $16 already for hours 41-50, then the company pays you only $8 per hour for those overtime hours.
Here’s the problem: Connecticut has no such regulation. To the contrary, our regulation 31-62-D4 requires that employers assign all employees in the mercantile trade a “regular hourly rate of pay.” Under the federal scheme, this is not done. Roach and his attorney believe that Connecticut simply does not permit the fluctuating work week method and believes that each employee should be assigned a regular hourly rate and receive one and a half times that rate when they work over 40 hours. In the example above, the employee would receive $300 for their 10 overtime hours instead of $80. Big difference!
The federal scheme undermines one of the fundamental reasons for overtime pay: to create jobs. The overtime laws were passed in part to make it more expensive for an employer to force a worker to work a second shift. In the above example, it should cost the employer $30 per hour, not $8. The fluctuating work week method actually makes it cheaper to push an employee past 40 hours and dissuades them from hiring a worker off the unemployment lines. With unemployment at over 9%, this law is undermining our jobs recovery.
Good luck to Mr. Roach and his attorneys and their important lawsuit!