Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Would You Work More for Less? Rulings Go against Employers Using 'Fluctuating' Workweeks to Cut Overtime Costs

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Would You Work More for Less? Rulings Go against Employers Using 'Fluctuating' Workweeks to Cut Overtime Costs

Article excerpt

Here's the rule: If someone works more than 40 hours, their salary cover the first 40 hours and overtime is to be factored at that salaried rate.

But employers often try to reduce their costs by using what is called a "fluctuating work week," in which workers receive their salary over the entire week -- no matter how many hours long that week is -- and then overtime is calculated on one hour of that longer week.

Two recent federal cases, however, have helped tilt the playing field in favor of Pennsylvania workers and the traditional overtime calculation.

Here's how the math shakes out: If a worker gets a weekly salary of $400, under Pennsylvania law that means the wage is $10 an hour for a 40 hour week. So the worker who earns $400 a week, and works 10 hours of overtime, should be paid an extra $150 (time and a half) for the extra 10 hours, for a total of $550 that week.

Under the same scenario, with a fluctuating work week, that base salary would be tabulated $8 at an hour -- $400, divided by 50 hours worked. Overtime would then be calculated at a time-and-a-half rate, or 150 percent of the $8 hourly rate, meaning overtime wages are $12 an hour, not $15. The result is that an employee on a "fluctuating work week" would be paid $440 total -- $320 in "regular" wages, and $120 in overtime, but just $40 "extra" that week.

Drivers for Frito-Lay, those people who move the bags of Doritos into the stores and arrange the shelves, were being paid by the fluctuating workweek standard, and sued claiming that Frito-Lay violated the Pennsylvania Minimum Wage Act of 1968.

The case was heard by U.S. District Judge Joy Flower Conti, who ruled in 2011 that the workers were covered by Pennsylvania Minimum Wage Law that prohibits the fluctuating workweek for workers who aren't paid by the job or the day.

And Judge Conti's decision was cited in an August 2012 decision by U.S. District Judge Cathy Bisson in a case against Kraft Foods Global Inc., in which Kraft admitted to paying employees only half- time for extra hours work with that half being the determined by the base pay divided by the total number of hours worked that week. …

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