Ninth Circuit Rules on Averaged Wages

Under a recent Ninth Circuit ruling, wages may be averaged out over a workweek, instead of calculated by the hour, to determine whether an employer has complied with minimum wage law. Douglas v. Xerox Business Service (9th Cir. 2017).

According to the ruling, if an employer pays its employees different hourly wages during a given workweek–one wage higher than minimum wage and one lower–but the wages for the workweek divided by the total number of hours worked averages out to at least minimum wage, the employer is in compliance with the Fair Labor Standards Act.

The employees in the Douglas case were customer-service representatives earning different rates depending on the task they performed and the time spent on that task. For each workweek, Xerox added their total wages and divided them by hours worked. If the calculation resulted in an hourly wage that was less than minimum wage, Xerox bumped the average hourly wage up to minimum wage.

The employees argued that the FLSA requires compliance to be measured on an hourly basis, an argument the Ninth Circuit ultimately rejected. With its ruling, the Ninth Circuit joins the Second, Fourth, and Eighth Circuits, along with the D.C. Circuit.

The Ninth Circuit comprises Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.