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.