67 F.4th 1301
11th Cir.2023Background
- Thompson worked as a security guard for Regional Security: initially paid $13.00/hr for ~40-hour weeks and received overtime at time-and-a-half ($19.50) when scheduled overtime.
- Employer later began scheduling ~60-hour weeks. After ~7 months of overtime at the $13.00 rate, Regional Security reduced Thompson’s non-overtime rate to $11.15/hr (overtime then = $16.73) and paid that reduced rate for roughly a year while scheduling substantial overtime.
- While on the $11.15 rate, Thompson’s total weekly pay for a typical 60-hour week (~$780.50) was essentially the same as if he had been paid $13.00/hr for all 60 hours—suggesting arithmetic that could avoid time-and-a-half on the prior $13.00 rate.
- After that period, Regional Security abruptly cut Thompson’s hours back to 40 and restored the $13.00/hr non-overtime rate.
- Thompson sued under the FLSA alleging the $11.15 rate was an artificial device to evade overtime; the district court granted judgment on the pleadings for Regional Security, and Thompson appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What was Thompson’s “regular rate” during the overtime period? | $13.00/hr — the established pre- and post-overtime rate; $11.15 was an artificial reduction to avoid overtime. | $11.15/hr — the rate actually paid during that period reflects the regular rate for those weeks. | The pleadings plausibly allege circumvention; cannot resolve on judgment on the pleadings. Case remanded. |
| Weight to give DOL interpretive rules (29 C.F.R. Pt. 778) on "regular rate" and anti-circumvention | Regulations (e.g., §778.500/§778.327) forbid lowering hourly rate inversely with hours and support treating $13 as the regular rate. | The employer disputes that the regulations control or that the facts fit a prohibited device. | Court applies Skidmore deference and finds the DOL regulations persuasive in prohibiting arithmetic designed to evade overtime. |
| Appropriateness of judgment on the pleadings | Complaint’s allegations (rate history, timing, arithmetic, restoration of $13) sufficiently plead a plausible FLSA circumvention scheme. | Facts do not conclusively show circumvention; judgment on the pleadings was proper. | Judgment on the pleadings was improper because the complaint plausibly alleged facts supporting circumvention; vacated and remanded. |
Key Cases Cited
- Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419 (establishing that the regular rate is a factual inquiry and is the keystone of FLSA overtime computation)
- Walling v. Helmerich & Payne, 323 U.S. 37 (employer and employee may set regular rate by agreement but not in an artificial manner to negate FLSA’s purposes)
- Bay Ridge Operating Co. v. Aaron, 334 U.S. 446 (interpretive standards and treatment of overtime premium in computing regular rate)
- Skidmore v. Swift & Co., 323 U.S. 134 (framework for deference to agency interpretations based on persuasiveness)
- Parth v. Pomona Valley Hosp. Med. Ctr., 630 F.3d 794 (employer may reduce rate unless reduction designed to circumvent FLSA overtime)
- Brunozzi v. Cable Commc’ns, Inc., 851 F.3d 990 (citing DOL regulations to prohibit rate reductions tied to overtime weeks)
- Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (discussing factors relevant to the weight accorded to agency interpretations)