A class action Fair Labor Standards Act suit filed last year by EMTs in Livingston County, Michigan has been settled for $150,000. The suit was brought by five EMTs who alleged that the county miscalculated their regular rate, which in turn led to a miscalculation of their overtime compensation.
According to the complaint the EMTs were “salaried, non-exempt employees”. What that means is they were hourly employees who were entitled to overtime compensation, but who were paid a salary. The FLSA allows hourly (non-exempt) employees to be paid a salary. However, disputes often arise when calculating the regular (hourly) rate for salaried non-exempt employees who work overtime. The employer must first calculate the employee’s “regular rate”, which in turn is multiplied by 1.5 to calculate overtime compensation.
A simple example: assume an employee makes $52,000 per year or $1,000 per week, and works 40 hours a week. Assuming no wage augments such as longevity pay or incentives, the regular rate would be $1,000/40 equals: $25.00/hr. Seems simple, right?
The calculation can become much more complex when employees work 35 hours per week, 37.5 hour per week, or 42 hours per week. In addition, some employers determine regular rate based upon annual salary and in turn estimate annual hours worked. In our simple example the employee works 40 hours per week times 52 weeks, or 2080 hrs/year. Divide $52,000/2080 and we get the same $25/hr. If an employee gets three weeks vacation, should that 120 hours of vacation be deducted from the 2080? If the employee routinely works 42 hours per week, should be proper divisor be 2184? The opportunity for disputes to arise is limited only by the parties’ imagination.
In the Livingston County case, neither the complaint nor the settlement agreement explain the basis for the dispute over the proper divisor. The complaint merely alleges that the county “used an inflated, artificial number of hours instead of using the actual hours worked. As a result, instead of paying its EMT employees overtime at the rate of time and a half for hours actually worked, Defendants use a reduced overtime rate by adding uncompensated additional hours on paper that the EMT employees did not actually work and were not paid for.”
According to the settlement memo: Based upon Plaintiffs’ theory of the case, Plaintiffs’ argued that the appropriate overtime rate should have been 13.97% higher for 24 hour shifts and 4.76% higher for 12 hour shifts.
The settlement includes $50,000 in attorneys fees, a $2,000 payment to each of the 5 named plaintiffs ($10,000 total), and the $90,000 balance will be divided amongst the class of EMTs based upon their damages.
Here is a copy of the Settlement Order:
Here is a copy of the complaint: