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January 5, 2022
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In Conner v. Cleveland Cty., N. Carolina, the Fourth Circuit Court of Appeals stated that using overtime to pay for contractually owed straight time is a violation under the Fair Labor Standards Act (FLSA). There, an employee was allegedly not paid at contractually owed rates for straight time in weeks in which she also received overtime pay, resulting in an overall deficit in owed pay.
Employees may seek to recover wages for uncompensated hours worked that fall between the minimum wage and the overtime provisions of the FLSA, otherwise known as “gap time.” Gap time refers to time that is not directly covered by the FLSA’s overtime provisions because it does not exceed the overtime limit, and to time that is not covered by the FLSA’s minimum wage provisions because employees are still being paid a minimum wage when their salaries are averaged across their actual time worked.
Ultimately, the court stated that an employer cannot classify wages as overtime without first paying all straight time wages due to an employee. The court looked to whether the straight time wages have been paid pursuant to the terms of the employment agreement. If the straight time wages have not been paid as owed, and an employee works overtime that week, then there could be an overtime gap time claim. Note that this ruling created a split with the Second Circuit.
- Conduct a pay audit to ensure pay structures are followed for both straight time and overtime pay.
- Consult with legal counsel for historical corrections.
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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.
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