No Appetite for Fluctuating Workweek OT Calculation

In 2014, a group of managers at General Nutrition Centers Inc. retail stores in Connecticut who received sales commissions in addition to a base salary filed a lawsuit alleging that GNC’s use of the fluctuating workweek method of calculating their overtime pay shorted them on overtime pay and was a violation of state wage laws and regulations.

Under the fluctuating workweek method, which is allowed under federal law, an hourly pay rate is computed based on the actual number of hours an individual works in a given week. The U.S. District Court certified to the state high court the question of whether an employer in Connecticut could use the fluctuating workweek method at all to calculate overtime pay under the state’s wage laws and regulations.

Although Connecticut’s wage laws don’t prohibit its use, a regulation by the state Department of Labor that governs the calculation of overtime pay for retail and mercantile employees prohibits the fluctuating method. The Connecticut Supreme Court held that the state’s wage regulation requires retail employers to determine an employee’s regular pay rate for overtime purposes by dividing their weekly pay by the hours they usually work rather than what they actually work in a week.

The court held that “[b]y setting forth its own formula for mercantile employers to use when computing overtime pay, one that requires them to divide pay by the usual hours worked to calculate the regular hourly rate, the wage [regulation] leaves no room for an alternative calculation method.” Williams et al v. General Nutrition Centers Inc., et al, Case No. SC 19829 (Connecticut Supreme Court Aug. 17, 2017).

IMPACT: An authorized method of calculating wages under federal law may not be available under certain states’ laws regarding the same subject.

Mark T. Kobata and Marty Denis are partners at the law firm Barlow, Kobata and Denis, which has offices in Beverly Hills, California, and Chicago. Comment below or email editors@workforce.com.