Quarterly Overtime Payments and the FLSA

Today’s FLSA Question: I am a full-time paid firefighter working for a small fire department with 13 full-time firefighters. We work 24 hours on duty, followed by a 48 hours off-duty for an average of 56 hours per week. My department has a strange way of paying overtime. Instead of paying firefighters for overtime worked in a regular bi-weekly paycheck; the department issues all firefighters a separate “overtime only” paycheck every three months. Apparently, this has been the practice here for years. Recently, myself and a couple of other firefighters approached our chief and requested that we receive overtime in our bi-weekly pay checks instead of quarterly. However, the folks at town hall told the chief this would pose an administrative burden and will not alter this practice. In my opinion, it seems unreasonable to have employees wait three months to receive their overtime pay. Does the FLSA allow employers to withhold overtime pay for months at a time?

Today’s Answer: Believe it or not, the FLSA does not contain any provision that directly addresses when an employee must be paid his or her overtime wages. However, the Department of Labor (DOL) has issued regulations that address this precise issue. Department of Labor regulations do not permit an employer to withhold overtime pay for months at a time. As a general rule, DOL regulations require overtime wages be paid “on the regular pay day for the period in which [the] workweek ends” with one small exception. Regulations found at 29 CFR §778.106 entitled Time of Payment carve out a unique exception that is most likely applicable to your situation. Here is the complete text of that regulation.

29 CFR §778.106 – Time of Payment

There is no requirement in the Act that overtime compensation be paid weekly. The general rule is that overtime compensation earned in a particular workweek must be paid on the regular pay day for the period in which such workweek ends. When the correct amount of overtime compensation cannot be determined until some time after the regular pay period, however, the requirements of the Act will be satisfied if the employer pays the excess overtime compensation as soon after the regular pay period as is practicable. Payment may not be delayed for a period longer than is reasonably necessary for the employer to compute and arrange for payment of the amount due and in no event may payment be delayed beyond the next payday after such computation can be made. Where retroactive wage increases are made, retroactive overtime compensation is due at the time the increase is paid, as discussed in § 778.303. For a discussion of overtime payments due because of increases by way of bonuses, see § 778.209. Emphasis added.

There can be instances where an employee’s overtime compensation cannot be properly determined until after the employee’s normal pay period has ended. This is the case with firefighters and law enforcement personnel that are subject to the FLSA’s §207(k) partial overtime exemption. The FLSA and DOL regulations allow public agency employers to adopt a work period longer than the traditional 7-day work week for these employees. In fact, public agency employers can even adopt a work period of up to 28 days. Longer work periods can create a challenge for folks tasked with paying police and fire personnel since very often the pay period does not correspond or align with the department’s chosen work period.

Here is a hypothetical to help explain further. Fire Department Alpha (FD Alpha) pays all personnel bi-weekly. However, FD Alpha has adopted a 28-day work period for FLSA overtime purposes. Due to the unique combination of both the work period and pay period, there is no way of determining the amount of overtime owed to FD Alpha firefighters’ until after the conclusion of the 28-day work period. Department of Labor regulations allow FD Alpha to pay all FLSA overtime due to firefighters at the conclusion of the work period, not necessarily the conclusion of the pay period. Therefore, FD Alpha is only required to pay straight time earnings in the first bi-weekly payroll check. The second, or next subsequent bi-weekly paycheck will include straight time earnings for that two-week period and any overtime earnings from the entire 28-day work period.

But your question also raises one critical factual issue that must be considered. What work period has your fire department adopted? The FLSA and DOL regulations require work periods be set and regularly reoccurring. Additionally, a qualifying work period must be between 7 and 28 days in length. The FLSA does not permit a “3-month” or even a “1-month” work period. I am unsure how your organization is even determining how much overtime that you and other firefighters are entitled too, absent the adoption of a qualifying work period. This should be an area of grave concern for both the fire chief and town officials. However, that may likely be a story for another day.

Finally, the FLSA and DOL regulations contain rather meager requirements on this topic. Most states have much tougher time of payment requirements than those contemplated by the FLSA and DOL regulations. In fact, in Rhode Island, a payment scheme like you described would likely be considered wage theft under state law (not the FLSA). In Rhode Island, wage theft is a criminal offense. Come to think of it, maybe the lack of a qualifying work period shouldn’t be town hall’s biggest worry.