Burning Question on Different Rates Of Pay

Today’s burning question: Can a municipality change your pay rate depending on the job/situation? For example, we have some 40-hour per week employees who receive a larger hourly rate to compensate them for the fewer hours they work compared to shift employees of the same rank. When the 40-hour employees work an overtime shift they switch their pay to the lower 53-hour rate. However, when 53-hour employees work non-shift related work they are not converted to a 40-hour rate. Is this practice legal under the FLSA?

Answer: There is nothing in the Fair Labor Standards Act that prohibits an employer from playing employees different rates of pay when working in different jobs, or even working the same job at different times. The examples are numerous: Firefighters may make more when working in certain specialty units, or working certain shifts, than they make when working their normal shift. If Job A pays $20/hour and Job B pays $25/ hour, and folks who work in Job A can also work in Job B and vice versa, the FLSA will not stand in the way.

The FLSA just requires that the employees be paid minimum wage, and overtime compensation if they work more than the statutory maximum of hours. But the FLSA is only part of the equation.

The other part of the equation is whether state law, collective bargaining agreements, and/or civil service laws permit employees to be paid different rates of pay. For example, if a collective bargaining agreement says anyone who works in Job B full time must receive $25/hour regardless of where they work, then it is the CBA that mandates the employee be paid $25/hour whether working in Job A or B.

Having said all this, the FLSA will have an important impact on any overtime that employees who work at different rates of pay must be paid. That is really a different issue than the one you asked, but it all is connected. Overtime paid to an employee who works at two or more different rates of pay must be calculated in accordance with US Department of Labor regulations. Rather than explain that here, click here for more details on overtime for folks who work at different rates.

As if that were not complicated enough… your scenario gets even more complicated. Under the FLSA, most employees are entitled to overtime after 40 hours in a 7-day workweek. Employees engaged in fire protection activities who qualify for the 7k exemption have a separate set of requirements that impacts both maximum hours worked as well as the length of the work period. The 7k requirements are complicated and beyond the scope of this question. What is worth pointing out is that when a 40-hour employee works in a position that qualifies under 7k, the following issue arises: does the firefighter get overtime after 40 hours in a week, or does the applicable maximum hours in a work period for 7 k firefighters apply? The difference is enormous because overtime for a 7k firefighter ranges from 53 hours in 7 days up to 212 hours in 28 days.

This is admittedly a different question than the one you asked but it points out the complexity of the FLSA issues that arise out of your seemingly simple question.

So to summarize: if an employer is legally allowed to pay an employee different rates of pay under state law, collective bargaining agreement, or civil service regulations, then the FLSA will allow it. However, paying employees different rates of pay can make overtime compensation calculations quite complicated. It becomes even more complicated when the employees are firefighters who work in both 40 hour/7day positions and 7k positions.