By Jim Cline and Sam Hagshenas
In Beers v. Johnson, a group of detention center employees filed suit against Terry Johnson, the Sheriff of Alamance County, North Carolina, for alleged violations of the Fair Labor Standards Act. At issue was the Sheriff’s use of a fluctuating workweek method to pay employees, which employees claimed led to inadequate and unlawful compensation practices.
The fluctuating workweek method allows employers to pay a fixed weekly salary for employees who work variable hours, as long as they receive additional compensation in the form of compensatory time off. This is due to an exception in Section 7(k) of the Fair Labor Standards Act, which raises the number of hours a law enforcement employee must work before they are eligible for overtime. For this payment method to be used, there must be a clear understanding of its terms between an employer and their employees.
This case was initially brought by Andrew Beers, a Detention Officer, and Katherine White, a Detention Corporal, who both have worked as “12-hour employees” at the Alamance County Detention Center. They were paid monthly for a rotating schedule of 14-17 shifts per month, working between 171.5 and 208.5 hours. However, the employees only received regular pay for 173.3 hours per month. The Employer also paid a $333.33 monthly shift differential to detention officers but did not include this money when calculating rates of pay for accrued compensatory time off.
Beers, White, and other employees claimed that they were not fully compensated for all hours worked, and that their benefits were being incorrectly calculated. They also claimed that the fluctuating workweek method did not apply to them, as the Employer did not meet its requirements.
The Employer argued that there was or should have been a clear mutual understanding about the compensation plan, as it was clearly laid out within the employees’ personnel manuals, and the employees had been collecting paychecks under the method for years.
The Court disagreed, noting that Beers made numerous complaints about the compensation plan since being hired. This raised serious doubts about the “mutual understanding” necessary to utilize the fluctuating workweek method. The Court also noted that the employer did not adequately explain its payment structure:
“In sum, the compensation structure at issue here is complex. The resources available to employees that could help explain said system appear inadequate. The Job Posting, Employee Handbooks, Check Details, and Paystubs are occasionally ambiguous, contradictory or unclear.”
The reviewing Judge found there were unresolved issues of fact and chose to deny the Employer’s motion for summary judgement.
The “fluctuating work week” as a method for calculating overtime pay is technically allowed under the FLSA but it includes stringent requirements that most employers can’t or don’t meet. Those include that the employees understand that they receive a consistent salary for all non-overtime hours without regard to how many hours they actually work. The unique payment method is rarely applied in the public sector, and more often applies to private sector employers where week-to-week schedules may vary widely and the parties agree to fixed amount of pay for those fluctuating hours.
When we’ve seen this defense claimed in Washington, it has been where the employer has violated the FLSA and is seeking a way to reduce their damages. As this court demonstrated, meeting the test is difficult and the defense is typically rejected.
Premium website subscribers can review on Chapter 10 of our Washington State Public Safety Employees Representatives Manual for more discussion on the various overtime cycles that can be applied to public sector work.
** Visit our Premium Website for more information on Scope of Coverage Under the FLSA, Compensatory Time, Calculating the “Regular Rate of Pay”, Exemptions in Calculating FLSA Damages, The “7(k)” Exemption and Establishing a 7(k) Exemptions. **
