Department of Labor Approves 9-Day Work Schedule w/o Overtime

The Wage and Hour division of the Department of Labor, tasked with overseeing compliance of the Federal Fair Labor Standards Act which regulates company compliance with wage and hour laws, recently issued an opinion letter permitting employers to schedule their employees to work 9 days in a two-week period, without paying overtime.

Under the Fair Labor Standards Act, employees who work in more than 40 hours per week are entitled to premium pay of time and a half for the hours worked in excess of 40. However, the Fair Labor Standards Act does not require the employer to use a calendar workweek when defining the company "workweek" for purposes of overtime pay.

A company wrote to the Department of Labor, seeking an opinion as to whether its proposed work schedule requires the company to pay its employees overtime. The proposed schedule divides Fridays in two parts and assigns each part of Friday to a different workweek. The workweek begins Friday at 11:31 a.m. and ends the next Friday at 11:30 a.m. As a result, the company could schedule employees to work 9 hours each day from Monday through Thursday of each week, and take every other Friday off. When the employees do not work Friday, they are within the federal overtime guidelines for the calendar week. When the employees work Friday, they work in excess of 40 hours per calendar week and (absent this opinion letter) would be entitled to overtime pay for all hours worked in excess of 40.

Even though the employer's creative definition of a "workweek" results in employees working 44 hours in a calendar week, the Department approved the practice stating that an employer is free to define a workweek that does not coincide with a calendar week, so long as the workweek is a fixed and recurring 168-hour period.

It remains to be seen whether California state wage and hour laws will be interpreted in the same manner. The laws in California are different - requiring overtime for an employee who works in excess of 8 hours per day or 40 hours per week. An exception to this rule in California applies to employees (where both the employee and employer consent) who work "alternative work schedules." A permissible alternative work schedule in California is four 10-hour days per week. Given California's differing laws, it is difficult to determine whether California's Department of Labor will follow its Federal counterpart.

Failure to comply with wage and hour laws can subject a company to large class action liability. Failure to comply with wage and hour laws require payments of daily premiums, per paycheck penalties, and continued payment of wages after termination. These penalties add up quickly and can be counted back by a court for four years.