On November 15, 2017, the United States Ninth Circuit Court of Appeals held that it is not a violation of the Fair Labor Standards Act for employers to average out their employees hourly pay over the course of a workweek, as long as the average is at or above the required minimum wage. Douglas v. Xerox Bus. Servs., LLC, 875 F.3d 884 (9th Cir. 2017).
The Plaintiffs worked as customer service representatives at Xerox call centers. They were asked to perform many different tasks throughout each week, with each task having a different pay rate attached to it, and some not having any pay rate at all. At the end of the week, Xerox added all the hours and corresponding pay rates together to determine how much each employee had made that week. If the pay averaged out to above minimum wage, the employees were not paid any additional money, but if it was below they were given enough of a bump to meet the minimum wage threshold.
The Plaintiffs claimed that Xerox’s policy violated the FLSA’s minimum wage requirement. They argued that employers are not permitted to average out the wages over the course of a week, but instead must be in compliance with the minimum wage for every hour worked. Since Xerox was not paying minimum wage for every hour of the week, the Plaintiffs argued that this was a violation of the FLSA.
The district court sided with Xerox, and the Ninth Circuit affirmed the decision. Since the statute itself does not address this issue, the Court relied upon the Department of Labor’s guidance to resolve the case. The Court pointed to the fact that the DOL has used a per-workweek measure since 1940 to determine compliance with the minimum wage requirement, and that Congress could have changed the statute in the past if it disagreed. Therefore, the Court held that employers are allowed to average out employees’ pay over a workweek to comply with the FLSA’s minimum wage requirement.
While this decision is not binding precedent in Ohio, it may be an indicator of how Ohio federal and state courts may rule if confronted with a similar case.
Attorneys at FHKAD routinely advise and defend employers regarding wage and hour matters. For more information, contact an attorney at (614) 221-1216.