The Fair Labor Standards Act’s (FLSA) overtime provisions are based upon a workweek of seven consecutive days, but neither the Act nor the underlying regulations require the use of any particular workweek. Employing broad language, the Eight Circuit Court of Appeals recently held that held that an employer which changes its workweek for the purpose of minimizing overtime is not “evading the purposes” of the Act. Abshire v. Redland Energy Services, LLC (October 10, 2012).
Redland Energy Services employs multiple crews of operators on its natural gas drilling rigs. These crews work twelve hour shifts for seven consecutive days from Tuesday through Monday and then are off for seven consecutive days. Originally, Redland used a Tuesday through Monday workweek for purposes of computing overtime for its drilling crews. It used a Sunday through Saturday workweek for all other employees. It later changed the workweek for the drilling crews to Sunday through Saturday to coincide with its other employees, but it did not change the actual workweek for the crews. Therefore, their actual workweek was split between two payroll workweeks and their overtime was reduced from 44 hours to 20 hours per actual workweek even though they worked the same schedule.
The FLSA regulations provide that a workweek “may begin on any day and at any hour of the day” and once established “it remains fixed regardless of the schedule of hours worked….” The regulations also provide that the “beginning of the workweek may be changed if the change is intended to be permanent and is not designed to evade the overtime requirements of the Act.” The rig workers sued, alleging the change was intended to evade the overtime provisions by reducing the number of hours in their normal work schedules that must be paid at the overtime rate. Redland argued that it made the change for the sake of administrative efficiency – aligning all of its employees on a single workweek for payroll purposes.
Rather than addressing the legitimacy of Redland’s business reason for the change, the Eight Circuit weighed in on the broader question of whether an employer could select its workweek with the purpose of minimizing overtime. Noting that the Department of Labor has never interpreted its proscription on evading the overtime requirements, the Court held that “the FLSA does not require a workweek schedule that maximizes an employee’s accumulation of overtime pay.” In this same vein, the court concluded that “an employer’s effort to reduce its payroll expense is not contrary to the FLSA’s purpose.” The Court found that the change – splitting the actual workweek between two payroll weeks – complied with FLSA and that therefore “the employer’s reasons for the adopting the change are irrelevant.” As long as the change was permanent and otherwise in compliance with the FLSA, it was within the employer’s right to make the change for any reason.