Seventh Circuit Upholds

Pegging rate to each week


Starting salary no basis


             Are you legally required to use a fixed rate of pay when calculating overtime?  In Urnikis-Negro v. American Family Property Services, the Seventh Circuit Court of Appeals recently decided that the 1,490.5 hours of overtime the plaintiff deserved would be paid at a fluctuating rate.  She had a “clear mutual understanding” with her employer that her $1,000.00 a week salary was her compensation regardless of hours worked.

             Urnikis-Negro had argued that since she was hired at $52,000.00 a year, or $1,000.00 a 40-hour week, and was entitled to a flat $37.50 an hour as the overtime multiplier, i.e., $25/hr x 1.5.  But the court found that she routinely worked over forty hours a week, so each week her hourly rate of pay changed.  $1,000.00 weekly compensation included all straight-time hours, even those in excess of forty.

            The Court recognized the irony of the hourly rate of pay decreasing the harder the employee worked (in terms of hours). But Judge Rovner opined that any argument of inequity was a matter for the legislature, or the U.S. Department of Labor.

            Word to the Wise: If you employ salaried workers who are non-exempt, make sure you advise them that their hourly rate is based on hours worked each week.