On November 20, 2019, the Pennsylvania Supreme Court ruled that the fluctuating workweek (“FWW”) method of calculating overtime pay owed to salaried workers is prohibited by state law. Chevalier v. General Nutrition Centers Inc., Pennsylvania Supreme Court, No. 22-WAP-2018.

Under the FWW 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.

The FWW method of pay arises from the general principle, confirmed by the U.S. Supreme Court in Overnight Motor Transportation Co. v. Missel, 316 U.S. 572 (1942), and codified on the federal level at 29 C.F.R. § 778.113, that if an overtime-eligible employee is paid on a salary basis, the regular rate of pay is computed by dividing the weekly salary by the number of hours which the salary “is intended to compensate.”  The example and requirements of the FWW method of pay are further explained in 29 C.F.R. § 778.114.

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 FWW violated Pennsylvania law. The issue was whether the PMWA’s silence on the FWW method of pay permits or forbids employers from using it. The plaintiffs argued that Pennsylvania intended for its wage law to be more protective than the federal Fair Labor Standards Act, and that the court should decline to interpret legislative silence on the issue as an endorsement of the pay practice.

The court agreed with the plaintiffs, and further noted that the Pennsylvania Department of Labor’s silence on the FWW method, combined with the agency’s explicit approval of other methods of overtime calculation, indicated that its failure to address the FWW method was intentional.

The Chevalier decision comports with the decisions of federal district courts in Pennsylvania, which have previously rejected the FWW method under Pennsylvania law.  Alaska, California, and New Mexico have similarly refused to permit the FWW method of pay under their state laws.

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Photo of Abigail Rosenblum Abigail Rosenblum

Abigail Rosenblum is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Abigail earned her J.D. from the University of Pennsylvania Law School, where she also completed a certificate program in business management…

Abigail Rosenblum is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Abigail earned her J.D. from the University of Pennsylvania Law School, where she also completed a certificate program in business management at The Wharton School and served as a Senior Editor of the Journal of International Law. During law school, she interned for the Honorable Eduardo C. Robreno of the Eastern District of Pennsylvania.

Prior to law school, Abigail worked in management at an industrial supply company, doing internal consultant work.

Photo of Allan Bloom Allan Bloom

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended…

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended many of the world’s leading companies against claims for unpaid wages, employment discrimination, breach of contract and wrongful discharge, both at the trial and appellate court levels as well as in arbitration, before government agencies, and in private negotiations. He has secured complete defense verdicts for clients in front of juries, as well as injunctions to protect clients’ confidential information and assets.

As the leader of Proskauer’s Wage and Hour Practice Group, Allan has been a strategic partner to a number of Fortune 500 companies to help them avoid, minimize and manage exposure to wage and hour-related risk. Allan’s views on wage and hour issues have been featured in The New York Times, Reuters, Bloomberg and Fortune, among other leading publications. His class-action defense work for clients has saved billions of dollars in potential damages.

Allan is regularly called on to advise operating companies, management companies, fund sponsors, boards of directors and senior leadership on highly sensitive matters including executive and key person transitions, internal investigations and strategic workforce planning. He has particular expertise in the financial services industry, where he has litigated, arbitrated, and mediated disputes for more than 20 years.

A prolific author and speaker, Allan was the Editor of the New York State Bar Association’s Labor and Employment Law Journal from 2012 to 2017. He has served as an author, editor and contributor to a number of leading treatises in the field of employment law, including ADR in Employment Law (ABA/Bloomberg BNA), Employment Discrimination Law (ABA/Bloomberg BNA), Cutting Edge Advances in Resolving Workplace Disputes (Cornell University/CPR), The Employment Law Review (Law Business Research, U.S. Chapter Author), and The Complete Compliance and Ethics Manual (SCCE).

Allan has served as longtime pro bono counsel to Lincoln Center for the Performing Arts and The Public Theater, among other nonprofit organizations.  He is a past Vice Chair of Repair the World, a nonprofit organization that mobilizes volunteers and their communities to take action to pursue a just world, and a past recipient of the Lawyers Alliance Cornerstone Award for extraordinary contributions through pro bono legal services.

Allan is a Fellow of the College of Labor and Employment Lawyers and has been recognized as a leading practitioner by Chambers since 2011.