Employees who work more than 40 hours are often paid at the rate of 1.5x their normal hourly rate for overtime. Instead of using the “time and a half” method, General Nutrition Centers (“GNC”) used the fluctuating workweek (“FWW”) method which was developed under the federal Fair Labor Standards Act. It permits an employer to calculate an employee’s overtime pay by dividing the employee’s total weekly pay by the number hours she actually worked during the week. Next, the number is divided by two and that’s the overtime rate. So, if you make $1,500 per week and you worked 60 hours, your overtime pay is $250 (1500/60 = 25; 25/2 =12.5; 12.5×20=250).
In order to qualify, the following criteria must be met:
- Employee’s hours must fluctuate from week to week;
- Employee’s salary must be fixed, excluding overtime;
- The fixed salary must equate to at least minimum wage; and
- Mutual understanding that the employer will pay that fixed salary regardless of the number of hours worked.
The downside to the FWW is the more an employee works, the less he gets paid per hour. For this reason, GNC’s employees filed a class action lawsuit against it and cited a wage order issued by the Connecticut Department of Labor (“DOL”) for employees in the mercantile trade, which includes retail employees.
While the Connecticut Supreme Court concluded that the FWW method is not prohibited under Connecticut law, it found that the specific DOL wage order relied upon by the GNC employees prohibits the use of the FWW method for retail employees. The key was the phrase “usual work hours” in the wage order. Accordingly, Connecticut retailers cannot compensate its employees for overtime using the FWW method.
Employers who are not in the mercantile trade can use the FWW if some other exception doesn’t apply. We recommend that you speak with a trusted legal consultant, like Monarch Law, to learn more about wage and hour laws and how they might impact your business.