Posted by Tamara
A few Idaho employers have been manipulating hourly wages to avoid paying overtime. Federal and state agencies have been getting tough with employers on overtime issues, and with misclassifying employees as exempt or as independent contractors.
A recent overtime case was heard by the 5th Circuit Court of Appeals, which overturned the lower court’s ruling in Gagnon v. United Technisource Inc. After working for UTI for over a year, Timothy Gagnon filed a wage complaint against UTI for unpaid overtime. When UTI hired Timothy Gagnon, a highly skilled aircraft painter, the usual pay for that job was $18 per hour. Yet, UTI offered Gagnon $5.50 per hour with a $12.50 per hour per diem. The per diem capped at $500, or exactly 40 hours. For hours in excess of 40 in one week, UTI offered Gagnon $20 per hour.
In the lower court case, UTI argued that the law required only $5.50 x 1.5 = $8.25 per hour overtime, and Gagnon was being paid almost three times that amount. The lower court agreed.
The Court of Appeals disagreed, and was especially suspicious of the capped per diem rate, because U. S. Department of Labor regulations requires any per diem to be added to the employee’s “regular hourly rate” to calculate overtime. Therefore, if Gagnon worked 40 hours per week, he earned $220 in wages + $500 per diem for a total of $720 or $18 per hour. His overtime should have been calculated at 1.5 X $18 or $27 per hour.
The judges ruled that “The regular rate by its very nature must reflect all payments which the parties have agreed shall be received regularly during the workweek, exclusive of overtime payments. The ‘regular rate’ becomes a mathematical computation once the parties have decided on the amount of wages and the mode of payment, which is unaffected by any designation to the contrary in the wage contract.”
Gagnon was awarded over $60,000 in damages, attorney’s fees and unpaid overtime.
This ruling affects employees in Idaho and across the nation.
Last 10 posts by Tamara
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