Guaranteed Overtime, Pay Smoothing, and the FLSA

Today’s FLSA Question: I am a firefighter for a city fire department. We have a total of 33 line firefighters and officers assigned to 2 stations on 3 shifts. We work 24 hours on duty, followed by 48 hours off-duty. Our department uses a 14-day work period and we receive overtime for all additional hours worked outside of our normally scheduled shifts. Plus, our department “smooths” our paychecks by paying us a guaranteed 6 hours of FLSA overtime every 2-week work period. We typically work 96 or 120 hours every 2 weeks, but we prefer to receive a fixed 6 hours of overtime every two weeks, instead of receiving uneven [long and short] pay checks. In the end it all works out the same. Now, we are being told by city hall that this practice has to end because it violates the FLSA. Does the FLSA forbid this practice? Also, what if we want it this way? Can’t we agree to it?

Answer: I apologize in advance. You are not going to like this answer. The folks at city hall are correct on this one. The FLSA and Department of Labor (DOL) regulations forbid the averaging of overtime across multiple workweeks or work periods. The pay plan that you describe above would be considered overtime averaging [a.k.a. smoothing]. Also, individual employees or even employee representatives cannot waive the provisions of the FLSA.

Department of Labor regulations found at 29 CFR §778.104 help explain further:

Each Workweek Stands Alone

The Act takes a single workweek as its standard and does not permit averaging of hours over 2 or more weeks. Thus, if an employee works 30 hours one week and 50 hours the next, he must receive overtime compensation for the overtime hours worked beyond the applicable maximum in the second week, even though the average number of hours worked in the 2 weeks is 40. This is true regardless of whether the employee works on a standard or swing-shift schedule and regardless of whether he is paid on a daily, weekly, biweekly, monthly or other basis. The rule is also applicable to pieceworkers and employees paid on a commission basis. It is therefore necessary to determine the hours worked and the compensation earned by pieceworkers and commission employees on a weekly basis.

The DOL has also issued regulations that further clarify the terms “workweek” and “work period” are interchangeable within the regulations. Therefore, the fact that your department opts for a 14-day work period, under the FLSA’s §207(k) partial overtime exemption, doesn’t change this analysis. Each workweek or work period must stand-alone.

Although it may seem like a very unpopular change, the city is wise to end this practice. Here is a hypothetical to consider:

Firefighter X is fired. Firefighter X visits a local employment attorney believing that he was fired without justification. The employment attorney examines the facts and concludes that the city was justified in firing firefighter X and followed all required procedural and substantive safeguards. Firefighter X is out of luck. Or is he? Very likely, as part of the employment attorney’s due diligence, he or she will examine the way the city paid firefighter X. More specifically, whether the city’s pay plan was FLSA compliant. Failure to adhere to the FLSA’s most basic overtime and hours worked requirements will most likely trigger an FLSA overtime lawsuit filed by the now former-firefighter X.

While this hypothetical may seem unfair to the majority of firefighters that may want to continue this averaging or smoothing practice, in reality the practice exposes the city to significant liability. With that said, there are ways to average a firefighter’s pay from week to week, without averaging his or her hours worked. However, as is usually the case in these situations, the devil lies in the details. Overtime averaging or smoothing is one of the many topics discussed in-depth at all of our FLSA for Fire Departments Live on-line webinars. The next is scheduled for October. If you have questions like this, please consider joining us.

FLSA for Fire Departments – October 5-8, 2021

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