Banking Employee Wages for Slow Periods

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Question: Sometimes our company is busy; sometimes, not so much. We know we have to pay overtime for hours over 40 in a week but we’d like to soften the impact on our employees during the slow times by creating an overtime bank where their overtime pay would go but not actually be paid out right away. For example, our techs would earn overtime during the summer months when we’re busy but would actually receive the overtime pay during the winter months when work is slow. Is this permissible under the Fair Labor Standards Act?

Answer: In a word…no. As much sense as the bank idea makes, and even if the employees think the idea of a bank is a good one, the Fair Labor Standards Act says that overtime must be paid on the regular payday for the pay period in which the overtime hours were worked. And, employees may not waive their rights under the Fair Labor Standards Act, regardless of what type of agreement the employer and employee attempt to draft.

Disclaimer

This response is intended for general informational purposes only and should not be construed as legal advice or a legal opinion, nor is this column a substitute for formal legal assistance. For help with particular legal needs, members are invited to consult with ACCA’s LegalTools Counsel, Brooke Duncan III of Adams and Reese LLP. Mr. Duncan can be reached at 504-585-0220 or by email at brooke.duncan@arlaw.com.

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Posted In: Legal