5th Circuit axes creative pay plan

The Fair Labor Standards Act (FLSA) was passed in 1938. For the past 86 years, employers have tried to circumvent its requirements, and for the past 86 years, they’ve failed. A very recent attempt was here in Texas.

Facts matter, conclusions don’t

Hamilton-Ryker IT Solutions is a Dallas-based company. It promulgated a pay plan for its systems engineers through which it treated them as exempt employees (either “highly compensated employees” or “learned professionals”) not entitled to overtime. Two of its IT engineers sued. On appeal, the U.S. 5th Circuit Court of Appeals (whose rulings apply to all Texas employers) summed up the plan this way:

[Employees] were paid on a two-tiered system. First, a “Guaranteed Weekly Salary” equal to eight hours of pay. The weekly salary only compensated [the employees] for, at most, one eight-hour workday. Then for any time worked beyond their eight hours, [they] were paid at their hourly rate, including any time worked over 40.