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Day Rate Workers: What Are The Wage And Hour Risks?

The U.S. Department of Labor's Wage and Hour Division (WHD) announced that its investigation of a sanitation employer found wage and hour violations. The WHD recovered more than $731,000 in back wages for 337 employees.

According to the investigation, the employer paid its Southeast Texas drivers and loaders a daily rate regardless of the number of hours worked each week. In addition, the employer failed to include overtime hours when calculating safety and attendance bonuses, further denying employees their lawful wages.

The WHD director noted that these violations are not uncommon, and advises employers to regularly review their pay practices to make sure they are compliant with the Fair Labor Standards Act (FLSA). "US Department Of Labor Investigation Recovers $731K In Overtime Back Wages For 337 Texas Sanitation Workers" www.dol.gov (Apr. 26, 2022).

 

Commentary

The DOL is enforcing wage laws regarding day-rate employees. To calculate overtime for day-rate employees:

·      Multiply the amount of pay for a day’s work by the number of days worked that week (ex. Sue is paid $300 a day on a day-rate basis. She works five days a week, (usually, but not always, 10 hours a day), so $300 x 5 days a week = $1500)

·      Divide that number ($1500) by the number of hours worked that week (Sue did work 10 hours every day, so 50) to find out the “regular rate” ($1500 ¸ 50 = $30)

·      Then, divide the regular rate ($30) by two to get the hourly rate ($30 ¸ 2 = $15). This is what you must pay the day rate employee for each hour worked over 40 in a week - $15.

Note the “regular rate” of pay will vary depending on the number of actual hours worked that week by a day rate employee. The more hours worked in a week, the lower the regular rate will be.

If a day-rate employee gets any other form of compensation from you, the employee should be re-classified as an hourly employee.

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