Pay Cuts for Overtime? Illegal Employer Wage Reduction Lawsuits

Attorneys working with ClassAction.org are looking into whether class action lawsuits can be filed on behalf of employees whose hourly rates may have been illegally reduced when they worked overtime hours.

Federal and state labor laws mandate that an employee’s overtime rate must be at least one-and-a-half times their regular pay rate. However, the attorneys believe some employers may be cutting workers’ hourly rates only in the weeks they work overtime, which may violate labor laws and result in employees being underpaid. If so, it’s possible that a class action lawsuit could be filed to help workers get back any unpaid wages they may be owed due to illegal wage reductions.

Pay Cut Laws: Can My Pay Be Reduced for Overtime?

The federal Fair Labor Standards Act (FLSA) specifies that although an employer and employee can agree that different rates will be paid for different types of work, an employer cannot lawfully lower an employee’s hourly rate just because they performed the work during overtime hours or during a week when they worked overtime.

An employee’s regular pay rate, which is multiplied by 1.5 to get their overtime rate, is the hourly rate they are actually paid for “the normal, nonovertime workweek” in accordance with their employment contract. In other words, it is determined by “what happens under the employment contract” and not just what the employer says will be treated as the regular pay rate for a given week.

Generally, the FLSA does not prohibit pay cuts (aside from mandating special rules for certain workers who receive a salary), but state laws often require employers to provide notice before cutting workers’ wages. The FLSA does, however, specify that if certain deductions are made from a worker’s pay, including as punishment, the worker’s regular pay rate for the purpose of calculating their overtime rate would remain the same as if the reduction had not been made.

Lawsuits Filed Over Wage Reductions

A proposed class action lawsuit filed in February 2021 claimed a home care company sought to “avoid the financial consequences” of paying proper overtime wages by reducing employees’ pay in weeks when they worked overtime. One plaintiff said that although she normally received $13 per hour, her employer paid her only $11.12 or $10.95 per hour for the first 40 hours in weeks when she worked overtime. Her overtime rate, which the suit said should have been $19.50 per hour, was illegally reduced to only $16.68 or $16.42 per hour, the lawsuit alleged.

In a lawsuit filed in February 2018, an hourly employee at another home care services company said her $10 hourly pay rate was cut to $9 in weeks when she worked more than 40 hours, robbing her of the wages she was entitled to under the Fair Labor Standards Act and Pennsylvania law.

How Could a Class Action Lawsuit Help?

A lawsuit could help workers recover money for any back pay they may be owed due to illegal wage reductions. It could also force their employers to change their pay practices.

What You Can Do

After you get in touch, an attorney or legal representative may reach out to you directly to ask you some questions about your experience and explain how you may be able to help get a lawsuit started. It costs nothing to fill out the form or speak with someone, and you’re under no obligation to take legal action.

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