In an issue of first impression, the Ninth Circuit joined the Second, Fourth, Eighth and D.C. Circuits (and the position adopted by the Department of Labor) that, in determining whether an employer has complied with the minimum wage provisions of the Fair Labor Standards Act (“FLSA”), the proper inquiry is whether the total compensation for a given workweek divided by the total hours for that week meets or exceeds the minimum wage. Douglas v. Xerox Business Servs., LLC, 2017 U.S. App. LEXIS 22967 (9th Cir. Nov. 15, 2017). Employers should be aware that this case addresses only federal, and not state, wage and hour law in the Ninth Circuit.

In Douglas, Xerox paid an hourly wage (at or above the minimum wage) for some activities of its call center employees (e.g. training) but for other activities, such as customer service calls, paid a rate that varied depending on both qualitative (e.g. customer satisfaction) and quantitative (e.g. call duration) factors, and could be an hourly rate that fell below the minimum wage for that hour. Each week an employee’s total compensation was determined and then divided by the number of hours worked. If the employee’s per-hour average for the week did not meet or exceed minimum wage, the employee was paid a subsidy that raised his hourly average to the legal minimum. Thus, while all employees were paid at least minimum wage for every hour of the week when calculating the average hourly rate over the course of the week, an employee might receive less than minimum wage for some hours of the week and more than minimum wage for others. The plaintiffs argued that this violated the FLSA because they were not paid at least minimum wage “for all hours worked.” The district court rejected the argument but certified the issue for interlocutory appeal.

Upon examination of the “test, structure and purpose” of the FLSA, the Ninth Circuit concluded that the Act itself does not specify whether the minimum wage calculation must, or even may, be determined on a per-hour, per-week or other basis. Shortly after the FLSA’s implementation nearly 80 years ago, however, the DOL adopted the workweek “as the standard period of time over which wages may be averaged to determine whether the employer has paid the equivalent of” the minimum wage. The Court of Appeals noted that since the DOL’s adoption of the workweek-based minimum wage compliance computation, every court of appeals addressing the issue has accepted the DOL’s position as a reasonable and enforceable interpretation of the Act. The Ninth Circuit joined those courts.

If you have any questions about minimum wage compliance or any other wage and hour issues, please contact the Jackson Lewis attorney with whom you work.

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Photo of Jonathan A. Siegel Jonathan A. Siegel

Jonathan A. Siegel is one of the founding Principals of the Orange County, California, office of Jackson Lewis P.C. He practices before the Equal Employment Opportunity Commission, National Labor Relations Board, state and federal agencies and courts.

Mr. Siegel also provides advice and…

Jonathan A. Siegel is one of the founding Principals of the Orange County, California, office of Jackson Lewis P.C. He practices before the Equal Employment Opportunity Commission, National Labor Relations Board, state and federal agencies and courts.

Mr. Siegel also provides advice and counsel regarding labor and employment law with respect to various issues ranging from wage and hour law, reduction in force, WARN Act, discipline, leave management and harassment and discrimination issues. Mr. Siegel defends employers regarding different varieties of wrongful termination and discrimination claims.

Mr. Siegel has represented management in union organizing drives and regularly defends employers in unfair labor practice proceedings as well as in collective bargaining and arbitrations. He also has extensive experience conducting wage and hour preventive audits. He conducts single location and multi-location audits for employers. The scope of such audits can range from examining specific issues, i.e., exempt status under federal law and California, to comprehensive FLSA and California Labor Code audits. Mr. Siegel has conducted audits for a wide range of industries including, but not limited to manufacturing, retail, transportation, various service industries, defense contractors and healthcare.

Mr. Siegel regularly speaks on a variety of topics including wage and hour, harassment/discrimination, national and California employment trends, Workers’ Compensation, EEO, managing leaves of absence under FMLA and state leave laws and union avoidance. He has moderated numerous programs and is featured as a keynote speaker for several different organizations.