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Florida Overtime Update

Posted by Tamara

State and federal agencies have been cracking down on Florida employers regarding wage and hour issues. Under particular scrutiny are misclassification of employees as independent contractors, exempt status and overtime.

An example is a recent case heard in the 5th Circuit Court of Appeals, where the court overturned a lower court ruling and found for the defendant.

In Gagnon v. United Technisource Inc. (UTI), Timothy Gagnon, a skilled aircraft painter, filed a wage complaint against Florida employer UTI for unpaid overtime. Mr. Gagnon had worked for over a year for $5.50 per hour, plus a $12.50 per hour per diem, which capped at $500, for a job that paid $18 per hour at that time. Gagnon also received $20 per hour for overtime pay.

UTI argued that by law they were only required to pay 1.5 times the employee’s “regular hourly rate” of $5.50, which resulted in $8.50 per hour. They had paid Mr. Gagnon nearly three times that amount. The court agreed.

The court of appeals disagreed and was particularly suspicious of the cap on the per diem. The U.S. Department of Labor regulations mandate that any per diem paid be included in the “regular hourly rate” for overtime calculation. In addition, under the Fair Labor Standards Act (FLSA), an employee cannot bargain away rights to minimum wage or overtime.

The judges stated, “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.”

According to their ruling, if Mr. Gagnon worked 40 hours per week, he earned $220 in wages + $500 per diem = $720, or $18 per hour. He was entitled then to 1.5 x $18, or $27 per hour for overtime.

This federal ruling affects employers and employees in Florida and nationwide.


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