Monday, June 21, 2010

The "Fluctuating Workweek" Method of Calculating Overtime Under the FLSA: The Fixed Salary Requirement


a.       When Is a Salary “Fixed”?
·         O’Brien v. Town of Agawam, 350 F.3d 279, 288-89 (1st Cir. 2003) (holding that variations in the weekly pay of law enforcement officers due to additional compensation for working night shifts prevented the finding of a fixed fluctuating workweek salary).
·         Heder v. City of Two Rivers, 295 F.3d 777 (7th Cir. 2002) (collective bargaining agreement providing for overtime pay for every hour worked beyond a stated maximum was “incompatible with treating the base wage as covering any number of hours at straight time”).
·         Brumley v. Camin Cargo Control, Inc., 2009 U.S. Dist. LEXIS 126785 (D.N.J. Apr. 22, 2010) (paying security officers premiums to work night shifts violates the fixed salary requirement to apply the fluctuating workweek method).
·         Adeva v. Intertek USA, Inc., 2010 U.S. Dist. LEXIS 1963, at *2-3 (D.N.J. Jan. 11, 2010) (“The record demonstrates that Plaintiffs’ compensation for non-overtime hours varied, depending upon earned offshore pay, holiday pay or day-off pay.  The Court is convinced that due to such payments, Plaintiffs cannot receive the fixed salary required to apply the fluctuating workweek method.”).
·         Ayers v. SGS Control Servs., Inc., 2007 U.S. Dist. LEXIS 19634, at *8-10 (S.D.N.Y. Feb. 27, 2007) (finding that inspectors did not receive a fixed salary because they received lump-sum “day-off pay” and “sea pay” for working on their days off and on offshore vessels).
·         Dooley v. Liberty Mut. Ins. Co., 369 F. Supp 2d 81, 86 (D. Mass. 2005) (following O'Brien).

b.      Does Deducting Leave When Employees Miss Work Preclude Application of the Fluctuating Workweek Method?
·         “An employer utilizing the fluctuating workweek method of payment may not make deductions from an employee’s salary for absences occasioned by the employee.”  29 C.F.R. §778.114(c).  This includes deductions for illness, sick leave, and personal business.  WH Admin. Op. FLSA 2006-15 (May 12, 2006); WH Admin. Op. (May 18, 1966). 
·         The Wage and Hour Division has ruled that occasional deductions for disciplinary reasons do not conflict with the use the fluctuating workweek method.  WH Admin. Op. (Dec. 19, 1978); WH Admin. Op. (Dec. 29, 1978).  But see Mitchell v. Abercrombie & Fitch Co., 428 F. Supp. 2d 735 (S.D. Ohio 2006) (rejecting argument that pay was not fixed salary because employees were subject to discipline if their work time and benefit (e.g., vacation) time did not add up to 40 hours a week).
·         Conne v. Speedy Cash of Mississippi, Inc., 246 Fed. Appx. 849 (5th Cir. 2007) (holding that that deductions for vacation, personal days, sick days or other absences prevent the employer from making use of the fluctuating workweek method).
·         Hunter v. Sprint Corp., 453 F. Supp. 2d 44 (D.D.C. Sept. 22, 2006) – The court ordered payment at the time and half rate because there was no clear mutual understanding as to whether the employee would receive the fixed salary if that employee worked less than a full-time schedule in a given week.  The court found the following arrangement inconsistent with the use of the fluctuating workweek method:  “Sprint maintained a policy that, unless an employee utilized earned leave (e.g., vacation or “floating holiday” time), it would deduct a full or partial day’s pay in the event that either (1) the employee was required to attend a court proceeding as a defendant or witness, or (2) the employee was unable to report to work due to inclement weather. . . . The unavoidable implication of this policy is that an employee who had exhausted his leave bank (or not accrued sufficient leave time) would have been docked by Sprint for such missed time.”
·         Advea v. Intertek USA, Inc., 2010 U.S. Dist. LEXIS 1963 (D.N.J. Jan. 11, 2001) - The court held that plaintiffs were entitled to payment at the one and half rate because the prerequisites for application of the fluctuating workweek method were not met.  Specifically, the court held that the record “demonstrates that Plaintiffs’ compensation for non-overtime hours varied, depending upon earned offshore pay, holiday pay or day-off pay . . . [D]ue to such payments, Plaintiffs cannot receive the fixed salary required to apply the [fluctuating workweek method].”
·         Compare Brumley v. Camin Cargo Control, Inc., 2009 U.S. Dist. LEXIS 126785 (D.N.J. Apr. 22, 2010) (defendant’s docking of plaintiff’s pay for unscheduled absences meant that plaintiff was no longer paid a fixed salary as called for by 29 C.F.R. §778.114 and thus the fluctuating workweek method could not apply to plaintiff) with Cash v. Conn Appliances, Inc., 2 F. Supp 2d 884, 906 (E.D. Tx. 1997) (reading the fluctuating workweek regulations to permit an employer to dock pay when an employee failed to show up for scheduled work).
·         Samson v. Apollo Res., Inc., 242 F.3d 629 (5th Cir. 2001) (holding that defendant’s “deductions for tardiness” for willful absences did not defeat use of fluctuating workweek method).
·         Yourman v. Dinkins, 865 F. Supp. 154 (S.D.N.Y. 1994) (refusing to apply fluctuating workweek method of overtime compensation because employer reduced employees’ suffered reductions in pay for working fewer than minimum number of hours).


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