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Fluctuating Workweek Method of Pay Rejected by PA Supreme Court

December 2, 2019

                     

On November 20, 2019, the Pennsylvania Supreme Court rejected the fluctuating workweek method of calculating overtime pay owed to salaried workers in Chevalier v. General Nutrition Centers Inc., Pennsylvania Supreme Court, No. 22-WAP-2018. Under the fluctuating workweek method of pay, an overtime-eligible employee receives a fixed salary for all hours worked regardless of how many hours are worked in a particular week. For workweeks in which the employee works more than 40 hours, he or she is entitled to overtime pay calculated at one-half the regular rate of pay (the fixed weekly salary divided by the actual number of hours worked in the workweek). The principle behind the arrangement is that the fixed salary for all hours worked has already compensated the employee for the straight time component of the worked hours above 40 (i.e., the “time” in “time and a half”). As a result, all that is left to pay is the halftime component.

Of course, employers must comply with both federal and state overtime laws, and state laws can (and often do) provide for additional or different rights and obligations. The issue in Chavalier was whether the employer’s practice of paying overtime based on the FWW method satisfied Pennsylvania law—specifically, the requirement under the Pennsylvania Minimum Wage Act of 1986 (“PMWA”) that employees “shall be paid for overtime not less than one and one-half times the employe[e]’s regular rate.” The Pennsylvania Supreme Court affirmed the Superior Court’s holding that the fluctuating workweek method violated Pennsylvania law. 

If there are any questions please reach out to David McComb at dfmccomb@zarwin.com and Zachary Silverstein at zsilverstein@zarwin.com.


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