Under the FLSA the minimum wage is $7.25 per hour. Does that mean that no one can get paid less than that on an hourly basis, or is there another way to view this?
Is paying less than $7.25 illegal?
Two Xerox employees made claim they were being paid less than the minimum wage and brought a lawsuit claiming that the law requires they be paid the minimum wage on an hour by hour basis. In this case, the court said no.
According to a report in SHRM, written by Jody Florence, these two workers performed multiple jobs at different pay rates depending on the work. Some of the work didn’t have a pay rate associated with it. According to Florence, what Xerox did was:
Xerox totaled the hours worked and divided that amount by the amount of pay earned for those hours. If the resulting hourly wage was equal to or exceeded minimum wage, the employees were not paid anything more. If the resulting hourly wage was less than minimum wage, the employees were given subsidy pay to bump their average hourly wage up to the minimum wage.
The two employees objected to this method and said they “should instead make an hour-by-hour determination of minimum wage compliance.”
Courts did not agree
Unfortunately for the two workers the trial court and the appeals court did not agree with them. The courts said the FLSA does not require hour by hour determinations. As long as at the end of a week the amount of pay given, divided by the hours worked, results in a minimum wage of $7.25 per hour then the method of workweek calculations is acceptable. In fact, that has been the accepted method for a long time on a federal level.
There are many companies that pay employees multiple rates, often based on the work that is being done. How you deal with this may vary based on the state in which the company resides or the state in which the employee performs the work. So make sure you understand those state laws.