Designing The Workweek To Avoid Paying Overtime
A California court held this week that an employer failed to properly pay overtime to its employees by artificially designing the workweek so as to avoid payment of overtime due for the 7th consecutive day of work. The court further held that on-call time needed to be paid as hours worked where employees were required to sleep aboard the employer’s ships and otherwise be within 45 minutes of the ship.
In Seymore v. Metson Marine, Inc., the plaintiffs worked 14 day “hitches” (alternating with 14 day rest periods) on the employer’s ships, performing cleanup of oil spills and other environmental hazards. The employer designated the workweek to start and end in such as way as to avoid paying 7th day overtime compensation on the 14th day of work. As a result, the plaintiffs only received the 7th day premium on the 7th day of work, but not the 14th. Although the court acknowledged various legal authorities supporting an employer’s right to designate the workweek for payroll purposes, the court held that where the purpose of the designation appears designed solely for the purpose of evading overtime compensation, it is not permissible. The court held that in this case there was no evidence presented that the designation was for any reason other than evading overtime compensation requirements.
The court also held that the employer failed to properly compensate employees for on-call time. Within the 14-day work period, the plaintiffs had periods of “off-duty, standy-by” time where they were permitted to leave the ship and do personal errands and the like. However, they were required to carry a cell phone or pager, refrain from alcohol consumption, and be within 30-45 minutes of the ship in the event of an emergency. The court held that this stand-by time was hours worked and needed to be paid as such because the employees were subject to the control of the employer.
The only good news for the employer in this case was that the court at least acknowledged that the employees’ sleep time on the ship was not compensable as hours worked. Plaintiffs had actually sought to be paid for this eight hours of sleep time each day.
It would not be surprising if the employer seeks review of this decision by the California Supreme Court. In the meantime, employers should use caution in designating their workweeks in such a way as to evade overtime compensation requirements. Employers with on-call employees are advised to think about changing their schedules consistent with the above.
