4th Circuit Recognizes Overtime Gap Pay Claims Under the FLSA

An emergency medical services (EMS) employee could proceed with a class action against Cleveland County, N.C., for failing to pay full straight time along with overtime pay under the Fair Labor Standards Act (FLSA), the 4th U.S. Circuit Court of Appeals ruled.

The plaintiff worked as an EMS employee for Cleveland Emergency Services (CES). She worked on a 21-day repeating schedule of one 24-hour shift followed by 48 hours off (a 24 on/48 off schedule). Full-time EMS personnel who work a 24 on/48 off schedule will always work more than 40 hours per week, since they will have at least two (and sometimes three) 24-hour shifts each week.

For three years before the complaint, Cleveland County paid the plaintiff and other full-time EMS personnel under the pay plan for county personnel set forth in the Cleveland County Code of Ordinances. The ordinances and CES' policies and procedures provide that the wage of a full-time EMS employee is equal to a set amount divided by 2,928 hours, which is the annual hours required of a 24 on/48 off schedule.

For the plaintiff, the annual amount used was $36,900 a year, resulting in a regular wage rate of $12.60. This regular rate was used by CES to calculate the overtime wage rate at one-and-a-half times the regular rate, or $18.90, by which CES paid the plaintiff for all hours over 40 in a workweek. Nevertheless, CES did not pay the plaintiff non-overtime hours (or straight time) in the amount of $36,900 each year. Rather, it paid her only $12.60 for 2,080 hours each year, which assumes a 40-hour workweek. As a result, the plaintiff was paid only $26,208 in straight-time pay each year.

CES paid the plaintiff full overtime compensation at $18.90 for 838 hours of overtime per year, which equals $16,027.20. Thus, with straight-time compensation of $26,208, she received only a total of $42,235.20 each year. If CES had paid the plaintiff $36,900 for straight time and $16,027.20 for overtime compensation, she would have received a total of $52,927.20 per year. Thus, CES paid her $10,692 less per year than she would have received if her straight-time pay was calculated with the same hourly rate and hours worked used to calculate the overtime rate.

Such a claim brought by the plaintiff on behalf of herself and other EMS employees is often called a "gap time" claim under the FLSA. The FLSA mandates only that an employer pay an employee straight time of at least the federal minimum wage—currently $7.25 per hour—and pay overtime compensation of at least one-and-a-half times the employee's regular rate. Due to this potential gap in the FLSA's coverage, an employee often must bring a state-law breach of contract claim or wage payment claim for unpaid straight time promised by the employer.

When the plaintiff brought her claim as a class action, it was assigned to a magistrate judge and CES moved to dismiss. The magistrate judge determined that the law of the 4th Circuit did not allow an FLSA claim under these circumstances and granted that motion. The district court agreed and dismissed the claim.

On appeal to the 4th Circuit, the plaintiff argued that a long-standing Department of Labor (DOL) regulation concerning the FLSA, 29 C.F.R. §778.315, states that an employer pay full straight-time pay as well as full overtime pay to comply with the FLSA's overtime pay requirements. The 4th Circuit agreed that the regulation, released in 1968, was entitled to deference by the court with regard to the difficult question of interpretation of law presented by the facts of the case.

While the court determined that the regulation supports an "overtime gap time," meaning a claim for unpaid straight time in circumstances in which an employee is paid overtime compensation, it found that the FLSA did not provide a "pure gap time" claim. This means that, in situations where the employee has not worked more than 40 hours a week, yet was not paid full straight-time wages by the employer, the employee would not have an FLSA claim for the underpayment.

Based on its finding that full straight time must be paid in situations in which overtime pay is earned, the 4th Circuit reversed the district court's decision and reinstated the claim.

Conner v. Cleveland County, N.C., 4th Cir., No. 19-2012 (Jan. 5, 2022).

Jeffrey Rhodes is an attorney with McInroy, Rigby & Rhodes LLP in Arlington, Va.