4th Circuit revives EMS worker's bid for overtime 'gap pay'

(Reuters) - A U.S. appeals court on Wednesday said employers who use part of their workers' salaries to compensate them for overtime may be violating federal wage law, creating a circuit split.

A unanimous three-judge panel of the 4th U.S. Circuit Court of Appeals revived a proposed class action accusing Cleveland County, North Carolina of underpaying emergency medical service workers by tens of thousands of dollars by effectively shifting some of their salary to cover overtime work.

The panel said allowing businesses to use wages that would normally pay for non-overtime hours to cover overtime obligations would violate the federal Fair Labor Standards Act's purpose of discouraging overworking employees.

The ruling creates a split with the 2nd Circuit, which said in a 2013 case that the FLSA does not recognize claims involving so-called "gap pay" where workers claim that while they were properly paid overtime they were not fully compensated for non-overtime work.

Lawyers for named plaintiff Sara Conner and the county did not immediately respond to requests for comment.

Cleveland County EMS workers are salaried and worked either 48 or 72 hours per week, so they generally always worked overtime, according to court filings.

Conner in her 2018 lawsuit said her salary the prior year was $36,900, but she was only paid about $26,200 for the first 40 hours she worked each week. The rest was used to help offset overtime pay she was owed, Conner said.

Conner earned about $42,000 in 2017 including additional overtime, but says she would have been paid nearly $53,000 had the county used her salary to compensate her only for the first 40 hours of her workweeks.

A North Carolina federal judge dismissed the case in 2019, saying Conner was paid more than the minimum wage and was compensated for overtime hours, so she could not show a FLSA violation.

On Wednesday, the 4th Circuit said Conner had plausibly alleged that the county skirted its duty to pay overtime by using some of her salary to pay her for those hours.

If Conner's claims are true, then she and other EMS workers ultimately did not receive all of the overtime pay they were entitled to, in violation of the FLSA, Circuit Judge James Wynn wrote.

The panel included Circuit Judges J. Harvie Wilkinson and Henry Floyd.

The case is Conner v. Cleveland County, North Carolina, 4th U.S. Circuit Court of Appeals, No. 19-2012.

For Conner: Philip Gibbons of Gibbons Law Group

For the county: Christopher Edwards of Ward and Smith

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