Fluctuating Workweek Overtime Calculation Method Not Available in Pennsylvania

Posted on September 06, 2012


Generally speaking, Pennsylvania employers are required to pay employees according to the minimum wage and overtime standards under state and federal law. In many cases, state and federal law are similar. However, employers are often unaware of differences between the two laws, which can lead to significant wage and hour violations and penalties. Where state and federal law differ on wage and hour issues, the more stringent requirements will control. This principle was reaffirmed in a recent case heard before a Pennsylvania federal court.

In Foster v. Kraft Foods (Civil Action No. 09-453, W.D.Pa. Aug. 27, 2012), the Western District of Pennsylvania found that the employer’s method of calculating overtime, although permitted under the federal Fair Labor Standards Act (FLSA), was not permissible under the Pennsylvania Minimum Wage Act (PMWA). Both the FLSA and the PMWA dictate minimum wage and overtime requirements. The FLSA allows employers to pay employees using a “fluctuating workweek method.” This method allows employers to pay non-exempt employees a salary for all straight time earnings and pay only one-half (.5) times the employee’s regular rate for any hours worked over 40 in a week, rather than paying one and one-half (1.5) times the regular rate, which is usually required by theFLSA. Generally, an employee’s regular rate fluctuates using this method, as it is based on the number of hours worked, but employers see an overall salary cost-savings.

Unlike the FLSA, Pennsylvania law does not provide for the use of a fluctuating workweek method. Instead, The PMWA calls for employers to compensate for overtime using the standard one and one-half times the regular rate calculation. In Foster, the employer used the FLSA fluctuating workweek method, failing to comply with the PMWA’s standard for calculating overtime. The court struck down the employer’s practice. Essentially, because the PMWA does not provide for a similar overtime calculation, Pennsylvania employers cannot use the FLSA’s fluctuating workweek method. Pennsylvania employers must calculate overtime at a rate of one and one-half times the employee’s regular rate, regardless of the method used for straight-time payment.  Foster serves as an important reminder that where federal and Pennsylvania wage and hour laws overlap, and your business is subject to both laws, the more restrictive law prevails. If you are a Pennsylvania employer who uses the fluctuating workweek method, please seek immediate legal assistance. If you have other questions about the differences between the allowable methods of overtime calculations under the PMWA and the FLSA, please contact any Knox Labor and Employment attorney at (814) 459-2800.

Carsen N. Ruperto is an Associate at Knox McLaughlin Gornall & Sennett, P.C.’s Erie office.

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