In yet another in a string of employee friendly decisions, the Connecticut Supreme Court rejected an employer’s argument that the obscure and patently unfair “fluctuating workweek” method of calculating overtime pay should apply. Stokes v. Norwich Taxi, LLC, ____ Conn. ___ (Conn 2008).
“The what?” you might ask. When an employee sues for unpaid overtime pay, most people would think that they should receive their regular rate of pay multiplied by 1 1/2 (time and a half). Under an obscure federal regulations, many pro-employer courts have actually awarded less than 1/2 time. That regulation permits employers to pay non-exempt employees a flat salary, and when they work more than 40 hours in a week, divide the total hours worked by the weekly salary and pay 1/2 that new lower hourly rate of pay for the hours past 40. Did you get that? I don’t blame you. Very few employers use it. I’ve given lectures to Human Resources professionals who have never heard of it.
Its most damaging effect comes when an employee or class of employees sues an employer for illegally classifying them as exempt when they should have been classified as non-exempt. Lets say those employees were paid $800 per week. If they worked 45 hours per week, most people would say they should be awarded $30 per hour for the 5 hours of overtime. Under the Fluctuating Workweek method, they get less than $10!
While a few federal Circuit Courts permitted this calculation a few decades ago, the modern trend has been away from permitting employers who never used this method in practice from asserting it as a defense when they get sued.
Now, our Supreme Court has correctly joined the movement. It has narrowly construed this regulation and ruled that an employer may not take advantage of this method of calculating overtime pay unless it made the payments of the overtime premiums as they were earned.
” And, by its plain terms, the method applies only when (1) the parties clearly agree that the fixed salary constitutes adequate straight-time payment (i.e., compensation apart from overtime premiums) for all hours worked and (2) the employee receives extra compensation of at least half his regular rate of pay, in addition to the fixed salary, for overtime hours during the weeks when he works overtime.”
This ruling will result in employees winning larger awards. It may also induce more employee rights lawyers to take overtime cases which otherwise might have been too small to be worthwhile. Kudos to Attorney Marc Mercier, counsel for the Plaintiff, and to the Supremes!