Holiday Overpayment May Offset Overtime Underpayment

​An employer's claim that it overpaid a former employee's holiday pay ought to be considered when determining whether the employer's failure to pay the former employee the appropriate overtime rate constituted an underpayment.

From November 2014 to January 2015, the defendant employed the plaintiff as a dispensing nurse at an hourly wage of $20.25. The defendant's employees, including the plaintiff, recorded time worked by clocking in and out of their shifts through a computer program. When the plaintiff claimed the defendant failed to pay her time and a half for overtime, the defendant conducted an audit of its pay records. The audit showed that some employees were paid straight time for overtime hours instead of time and a half.

With respect to the plaintiff, the audit revealed three hours for which she was paid straight time instead of overtime wages, a difference of $30.38. The audit also revealed that the defendant mistakenly overpaid the plaintiff amounts designated as holiday pay by $486.

The defendant paid its affected employees an additional time-and-a-half amount for the undercounted hours, although it did not pay the plaintiff any additional amount. The defendant argued that it overpaid the plaintiff, due to its allegedly mistaken payment of $486 designated as holiday pay as well as the plaintiff's failure to repay a $1,500 loan for car repairs extended by the defendant during her employment.

The Fair Labor Standards Act (FLSA) generally requires an employer to pay its employees 1 1/2 times their regular rate of pay for any time worked in excess of 40 hours per workweek. The plaintiff alleged the defendant violated the FLSA by paying her a regular hourly wage instead of time and a half for all overtime hours worked. If an employee satisfies his or her burden of proving the employer has violated the FLSA, the employee may be entitled to recoup unpaid overtime compensation and damages.

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A federal district court in Kansas refused to hear the defendant's claim that the plaintiff failed to repay a car loan, because that claim relied on an entirely different set of facts than the plaintiff's claim for overtime wages and required different evidence and witnesses. Conversely, the court found a logical relationship between the plaintiff's FLSA claim to recover underpaid wages and the holiday-pay issue underlying the defendant's claim to recover overpaid wages.

Based on the defendant's allegations of unearned holiday pay, the court found it disputed as to whether the defendant's failure to pay the plaintiff at the appropriate rate for all overtime hours constituted an underpayment. The court also found contradicting evidence as to whether the defendant had a practice of paying straight-time wages for overtime hours, as the plaintiff alleged. Because there was a question as to whether the defendant had a practice of underpaying employees for overtime hours worked and whether the plaintiff was underpaid, the court denied the plaintiff's motion for summary judgment for violation of the FLSA.

Jones v. Addictive Behavioral Change Health Group LLC, D. Kan., No. 2:16-cv-02685 (Jan. 31, 2019).

Professional Pointer: Employees covered by the FLSA must receive overtime pay for hours worked over 40 in a workweek at a rate not less than 1 1/2 times their regular rates of pay. The FLSA does not require overtime pay for work on Saturdays, Sundays or holidays, unless the employee worked overtime hours on such days.

Roger S. Achille is an attorney and a professor at Johnson & Wales University in Providence, R.I.