Supreme Court Of Pennsylvania Rejects Use Of Fluctuating Workweek Method For Overtime Payment Calculation

In late 2019, Pennsylvania defected from the traditional use of the fluctuating workweek method used to calculate overtime rates for employees working fluctuating hours. Instead, in Chevalier v. General Nutrition Centers, Inc., the Supreme Court of Pennsylvania determined that the Pennsylvania Minimum Wage Act (PMWA) does not allow the fluctuating workweek method (FWW Method) of calculating overtime compensation to be used for salaried employees working fluctuating hours. In light of this decision, employers in Pennsylvania may want to review and, if necessary, revise their pay practices in order to confirm they are in compliance with this new ruling.

Background

"Under the FWW Method, the salaried employee's 'regular rate' of pay is determined by dividing the total of the weekly salary by the number of hours actually worked that week . . . . The employer then accounts for the overtime requirement of an additional 'one-half times the regular rate' by multiplying the number of hours in excess of forty by 0.5 times the regular rate . . . the '0.5 Multiplier.'" Contrary to the Fair Labor Standards Act (FLSA) and related regulations, which explicitly permit employers to use the FWW Method to compensate employees working fluctuating hours, the PMWA and related regulations do not specifically address a method for calculating overtime for employees working fluctuating hours. As a result, employers in Pennsylvania had been left without clear guidance on the proper method for calculating overtime for employees working fluctuating hours.

With this gap in guidance in Pennsylvania, Plaintiff Tawny L. Chevalier, a former GNC store manager, filed a class action complaint against General Nutrition Centers, Inc., and General Nutrition Corporation (collectively GNC), on behalf of herself and all others similarly situated. The plaintiffs, who worked fluctuating workweeks and who were paid in accordance with the FLSA under the FWW Method, alleged that GNC had violated "the PMWA's requirement that employees 'shall be paid for overtime not less than one and one-half times the employe[e]'s regular rate'" when it calculated their pay using the FWW Method.

More specifically, the "Plaintiffs assert[ed]" that instead of using the 0.5 Multiplier provided for by the FWW Method, the PMWA provides "that overtime compensation should be calculated by multiplying the number of hours worked in excess of forty by 1.5 times the regular rate . . . the '1.5 Multiplier.'"

In...