Friday, September 20, 2019

Overtime on Split-Day Pay — Employer Beware


A note of caution to Minnesota-based employers — federal enforcement of the Fair Labor Standards Act (FLSA) should not be your only concern when drafting employee compensation plans; the Minnesota Department of Labor and Industry is actively auditing employers in search of those avoiding their overtime requirements under the Minnesota Fair Labor Standards Act (MFLSA). This past Wednesday, the Minnesota Supreme Court upheld a million dollar compliance order issued by the Department against an employer utilizing split-day compensation plans. The court held that an employer must pay an employee at least one and one-half time for any hours worked in excess of 48 hours in a given week (overtime hits after 48 hours under the MFLSA as opposed to 40 hours under the FLSA), regardless of how that employee was compensated prior to meeting those 48 hours. Further, the court held that an employer may not exclude time and one-half pay for work performed within the employee’s first 48 hours of work when calculating the employee’s regular rate of pay.