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News | Sep 06, 2012

Western District of Pennsylvania Holds that the Fluctuating Workweek Method of Pay is Impermissible Under Pennsylvania Overtime Law

On August 27, 2012, Judge Cathy Bissoon of the Western District of Pennsylvania issued an opinion in Foster v. Kraft Foods Global, Inc. holding that the Fluctuating Workweek method of paying overtime compensation was not permissible under the Pennsylvania Minimum Wage Act.

Under the Fluctuating Workweek method, an employee is paid a salary and then receives additional compensation for hours worked over 40 in a workweek.  However, the overtime pay is calculated by dividing the employee’s salary by all the hours worked in a week to come up with a regular hourly rate of pay.  The regular hourly rate of pay is then divided by two to come up with a “half-time” rate.  The employee then receives half-time pay for each worked hour over 40 that he or she works in a particular week.  Many times this method of paying overtime is referred to by employees as “‘Chinese Overtime.’”  See  Evans v. Lowe’s Cos., 2004 U.S. Dist. LEXIS 8335, *8 (M.D. Pa. Apr. 29, 2004).

Federal overtime law allows employers to pay employees under the Fluctuating Workweek method.  However, in Foster v. Kraft Foods Global, Inc., 2012 U.S. Dist. LEXIS 121282 (W.D.Pa. Aug. 27, 2012), Judge Bissoon held that Pennsylvania employers are not allowed to pay workers under the Fluctuating Workweek method without violating 34 Pa. Code § 231.43(d)(3) of the Pennsylvania Minimum Wage Act which requires that workers receive overtime pay equal to 150% of their hourly rate for all hours worked over 40 in a workweek.

The attorneys at Winebrake & Santillo have successfully litigated cases against some of the nation’s largest retailers on behalf of workers challenging the Fluctuating Workweek of paying overtime compensation.

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