Changing Payday Does Not Violate FLSA
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In a recent interpretation of the Fair Labor
Standards Act (FLSA), the Second Circuit Court of Appeals determined that
an employer who changed the payday schedule permanently for administrative
reasons did not violate the FLSA. In its decision in John F. Rogers v.
Troy, N.Y., No. 97-7120 (5/22/98), the court relied on the FLSA
regulations regarding workweeks and the payment of overtime and developed
a four-part standard to be met when an employer changes paydays.
Employees Allege Minimum Wage, Overtime
Violations
For administrative reasons, the Troy city
officials decided to adopt a uniform payday for both civilian workers and
police officers. The city phased in the new payday schedule by delaying
the police officers’ pay by one day each week for five weeks. The police
officers filed suit, charging the city violated the FLSA by not paying
them promptly. The district court dismissed the officers’ claim by
determining that the payday change was permanent and not designed to
sidestep the FLSA. The officers appealed to the Second Circuit.
Four-Part Standard Used For Changing Paydays
In its decision, the Second Circuit focused
on the issue of whether an employer can change the payday. While the FLSA
requires prompt payment of wages, it does not specify when wages must be
paid. In the absence of statutory direction on this issue, the court
looked to the FLSA regulation regarding the beginning and ending of the
workweek for purposes of calculating overtime wages. According to the
regulation, an employer may change the beginning and ending dates of the
work period as long as the change is permanent and is not an attempt to
sidestep the FLSA’s overtime requirements. Relying on this analysis, the
court developed a four-part standard for changing paydays. Specifically,
the payday change does not violate the FLSA if it (1) is made for a
legitimate business purpose; (2) does not result in an unreasonable delay
in payment; (3) is intended to be permanent; and (4) does not violate the
minimum wage or overtime provisions of the FLSA.
Apply Standard; Check Applicable State Laws
This case provides a four-part test
employers can use to ensure payday changes comply with the FLSA. However,
employers should note that most state laws have payday requirements that
specify when wages must be paid. Thus, employers also should check
applicable state law for details. For more information on compensable
time, see Hours of Work, Chapter 207, page 207:9, note 18; and Appendix A,
page 207:22, section 8. For more information on state payday requirements,
see Pay Procedures, Chapter 305, page 305:6, note 10. |
Personnel
Policy Service, Inc.
