Drilling Company's Change to Workweek Didn't Violate FLSA, Eighth Circuit Rules

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A natural gas drilling company in Arkansas did not violate the Fair Labor Standards Act when it redesignated the workweek of drilling rig operators, but did not change their actual work schedules, resulting in their overtime hours being split between two payroll periods, the U.S. Court of Appeals for the Eighth Circuit ruled Oct. 10 (Abshire v. Redland Energy Servs. LLC , 8th Cir., No. 11-3380, 10/10/12).

According to the court, the drilling rig operators at Redland Energy Services LLC initially worked 12-hour shifts for seven consecutive days from Tuesdays through Mondays, followed by seven days off.

In May 2009, Redland reduced the size of its drill rig crews, and changed the designation of the operators' workweek to Sunday to Saturday--the same workweek for company truckers, office staff, and other employees. In a memo to employees, the company stated: “There will be no adjustment to your work week, which will remain from Tuesday-Monday [but] you will begin to have a reduction in overtime hours as your work week will be split into 2 payroll periods.”

Roy Abshire and four other operators sued Redland in November 2010, contending that the FLSA bars Redland from changing an existing workweek to reduce overtime rates.

Redland argued that it changed the workweek to increase administrative efficiency. By placing all employees on the same workweek, the company said, it reduced the time needed to “prepare payroll” and lowered “payroll expense by reducing the number of hours that drill rig employees must be paid at the FLSA-mandated overtime rate.”

The U.S. District Court for the Western District of Arkansas granted summary judgment to Redland, and the employees appealed.

Affirming the district court ruling, the Eighth Circuit found that an employer does not run afoul of the FLSA merely because it designates a consistent workweek in which employees earn fewer overtime hours “than they would if the workweek was more favorably aligned with their work schedules.”

The FLSA does not require a workweek that “maximizes an employee's accumulation of overtime pay,” and an employer's effort to reduce its payroll expenses is not contrary to the statute's purposes, the court said. As such, Redland's modification of the operators' workweek did not constitute a violation of the FLSA, the court held.

By Jay-Anne B. Casuga  

Text of the opinion is available at http://op.bna.com/dlrcases.nsf/r?Open=jaca-8yxn62.

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