Some employers don’t just need to know the federal wage-and-hour rules — they also need to know the currency exchange rate if they pay workers in a non-U.S. currency. Paying workers in a foreign currency is acceptable under the Fair Labor Standards Act. But the amount paid still must meet the U.S. minimum wage, as a California company recently learned the hard way.
After alleging that Bloom Energy Corp., a California company that makes fuel-cell power generators, was paying its workers the equivalent of $2.66 per hour in pesos, the U.S. Department of Labor stepped in and ordered it to pay more than $62,000 in unpaid wages to those workers.
This recent DOL action serves as a reminder that employers must understand what constitutes a legitimate wage payment under the FLSA — including how payments may be made and what qualifies as “payment.” Although the FLSA statute is largely silent on this topic, several courts and DOL guidance have clarified the scope of what can be deemed wages under the FLSA.
The FLSA regulations (29 C.F.R. §531.27) state that the act requires “payments of the prescribed wages, including overtime compensation, in cash or negotiable instrument payable at par.” Accordingly, DOL requires payment by “cash or its equivalent.”
The regulations do not allow payment by “scrip, token, credit cards, ‘dope checks,’ coupons and similar devices [which] are not proper mediums of payment under the [FLSA]” (29 C.F.R. §531.26). However, the regulations do not further define what constitutes “cash or its equivalent.”
As a result, several courts (as well as DOL) have had to interpret particular situations related to wage payment, including payment in non-U.S. currency, direct deposit wages and late payments.
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