5th Circuit: One more time—Weekly means weekly

The U.S. 5th Circuit Court of Appeals (whose rulings cover Texas) had to shoot down another employer effort to do an end run around the rules of paying overtime. For the lesson dealt to a Houston-area employer, read on.

Wrong way

NES is a staffing company. It classified some of its employees as exempt from overtime. All well and good, but NES tried two compensation approaches for employees it sought to classify as executive, administrative, or professional:

• Payment of a one-day or eight-hour guarantee; and
• Payment of a set amount if an employee did any work in a particular week—if they exceeded a predetermined number of hours or days, they were paid their normal hourly or daily rate for all hours worked.

Wrong and wrong!

Right way

For the executive, administrative, or professional exemption to apply, the employee must be paid on a weekly basis. What does this mean? Per the 5th Circuit:

Put simply, payment on a “weekly basis” requires that an employee be paid a “weekly rate.”. . . And just as employees paid an hourly rate are paid for all work performed that hour, a weekly rate compensates employees for all work performed that week [no matter how little]. . . . A guaranteed eight-hour payment [therefore fails] the salary basis test. . . . A “salary” based on eight hours “failed to provide a weekly rate” and thus [is] not a true salary.