The Fair Labor Standards Act (FLSA) requires an employer to compensate any employee who is not exempt from its provisions at a rate that is “not less than one and one-half times the regular” wage rate paid to the employee for all work time performed by the employee in excess of 40 hours (“overtime”) during the employee’s “workweek.” The employer retains discretion under the FLSA to set employee workweeks, which can vary depending on an employee’s classification or employer requirements provided the workweek for each employee consists of a consecutive period of 168 hours.How an employer schedules its employees to work during workweeks sometimes causes the employer to incur overtime liability that may be avoided were different workweeks established by the employer. For example, an employer who regularly schedules a group of employees to work seven consecutive 12-hour shifts during a Tuesday through Monday workweek with seven consecutive days off will incur 44 hours of overtime liability for each employee. Were the employees’ workweek changed to a Sunday though Saturday workweek, the employer’s overtime liability will be reduced by 20 hours because 60 of the work hours will be performed Tuesday through Saturday of one workweek and the remaining 24 work hours will be performed on Sunday and Monday of the succeeding workweek.
Provided any modification of the workweek is permanently implemented in accordance with the FLSA implementing regulations, an employer can legally change employee workweeks to mitigate overtime liability. See, e.g., Abshire v. Redland Energy Services, 11C, 8th Cir., No. 11-3380, October 10, 2012.
The plaintiffs in Abshire contended that the FLSA prohibited their employer from changing their workweek to mitigate its overtime liability. The Court rejected their contentions, and ruled that the FLSA was not designed to “maximize the payment of overtime” to employees; that an employer may permissibly establish workweeks that minimize its overtime exposure; that an employer’s effort to reduce labor costs does not contravene the purpose of the FLSA; and that permanently changing an employee’s workweek to achieve this outcome does not contravene the FLSA.
Accordingly, an employer may permissibly implement modifications of employee workweeks to reduce or eliminate its labor costs without violating the FLSA provided these are intended to be permanent and are effectuated in accordance with FLSA regulatory requirements. However, it advisable that an employer consult with counsel before imposing changes to employee workweeks to ensure that this will occur consistent with the FLSA and any applicable state laws and will not violate any contractual or bargaining obligations of the employer.