Eighth Circuit Rules in FLSA Overtime Case

 
Tuesday, October 30, 2012
 
In Abshire v. Redland Energy Services, LLC, the U.S. Court of Appeals for the Eighth Circuit found that the federal Fair Labor Standards Act permits an employer to change its employees' seven-day workweek, even when one of the stated reasons for the change is to reduce FLSA overtime costs. 

Redland Energy drills and services natural gas wells in Arkansas.  In 2009, Redland reduced the size of its drill rig crews from five operators to four and changed the designation of their workweek from Tuesday-to-Monday to a Sunday-to-Saturday workweek used for other employees. Redland announced the change in a memo distributed to drill rig employees that advised, “There will be no adjustment to your work week, which will remain from Tuesday-Monday [but] you will begin to have a reduction in overtime hours as your work week will be split into 2 payroll periods.” 

Redland Energy argued that putting all employees on the same workweek increased efficiency by reducing the time it takes the office manager to prepare payroll from five to two days a month and decreased payroll expense by reducing the number of hours that drill rig employees must be paid at the FLSA-mandated overtime rate.  The employees argued that the Fair Labor Standards Act (FLSA) prohibits an employer from changing an existing workweek for the purpose of reducing employee overtime and that Redland’s true purpose in changing their workweek was to reduce work at overtime rates.  The employees also contended that the FLSA requires that such a change requires a legitimate business purpose.  

The Eighth Circuit Court held that “[s]o long as the change is intended to be permanent, and it is implemented in accordance with the FLSA, the employer’s reasons for adopting the change are irrelevant.”

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