Introduction
The concept of “day rate” pay is common in industries where labor needs fluctuate, such as construction, installation, and retail fixture assembly. Under a day rate pay structure, workers are paid a flat amount per day, regardless of the hours worked. However, this pay structure can raise issues about how overtime pay should be calculated. The recent overtime lawsuit involving DisplayMax and FixtureMax has brought renewed attention to these issues, highlighting the importance of properly calculating overtime compensation.
What is a Day Rate Worker?
A day rate worker receives a set amount for each day worked, rather than an hourly wage or a traditional salary. This arrangement can be attractive for both employers and employees, offering predictability and simplicity. However, confusion often arises about overtime eligibility: does a flat daily payment exempt workers from overtime pay under the Fair Labor Standards Act (FLSA)? The answer is typically no.
Overtime Laws and the FLSA
The FLSA requires that non-exempt employees be paid at least one and a half times their regular rate for hours worked beyond 40 in a workweek. A common misconception is that paying a day rate means employers are not required to pay overtime. In reality, unless a worker meets the strict criteria for one of the exemptions under the FLSA, overtime rules still apply. Most day rate employees are not exempt and therefore, entitled to overtime pay. When an employee is paid on a day rate basis, overtime pay is calculated by adding up the employee’s day rate earnings for the week and dividing those earnings by the hours worked for the week to determine the regular rate. The employee is then entitled to ½ of that regular rate for all overtime hours. The reason the employee gets ½ time pay after 40 hours is that the day rate pay is deemed to compensate the employee at straight time pay for all hours worked. Therefore, the additional ½ pay for the overtime hours gets the employee to time and a half pay. However, in order to use this method of calculating overtime pay, the employer must show that they are paying a true day rate.
The DisplayMax & FixtureMax Overtime Lawsuit: What Happened?
DisplayMax and FixtureMax, companies specializing in store fixture installations and retail merchandising services, recently faced a class-action lawsuit regarding their pay practices. The overtime case alleges that the company’s overtime pay practice did not meet the FLSA’s requirements for a day rate pay practice because the employee’s pay was reduced if they worked less than a full shift. In addition, the employees received additional types of pay, such as differential pay, and these wages were excluded from their regular pay when overtime pay was calculated. Because of these pay practices, the case alleges the employees should have been paid overtime at a time-and-a-half rate, instead of half-time rates and that overtime pay was miscalculated.
Why the Lawsuit Matters
The DisplayMax & FixtureMax case serves as a warning to employers who fail to pay day rate employees as required by the overtime rules. For employees, it highlights the importance of knowing your rights. If you are paid a day rate and regularly work more than 40 hours per week, you may be entitled to additional pay.
What Day Rate Workers Should Do
- Keep track of your hours and review your paystubs.
- If you suspect you are not being paid fairly, contact the Lore Law Firm for a free, confidential review.
Conclusion
The DisplayMax & FixtureMax overtime lawsuit is a powerful reminder that all workers—regardless of pay structure—deserve fair compensation for their labor. Day rate pay can be legal, but only if done correctly.
Michael Lore
Founding Attorney
Michael Lore is the founder of The Lore Law Firm with over 25 years of experience in labor and employment law. He handles cases ranging from unpaid overtime and class actions to executive contracts and personal injury matters in courts nationwide.
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