A manager at a Payless shoe store asserted in a class action that Payless using a “fluctuating workweek model” to calculate the overtime to which she and other Payless workers were entitled violated the requirement under the Pennsylvania Minimum Wage Act. That law requires that employees receive overtime compensation for every hour that they work in excess of 40 hours a week. This lawsuit relates to an August 2012 decision by a Pennsylvania court that determined that a fluctuating workweek model such as the one that Payless uses was an illegal method for determining the overtime compensation to which an employee was entitled.
The challenged system calculated the overtime compensation to which an employee was entitled by dividing that person’s weekly salary by the total number of hours that he or she worked that week and then paying him or her an overtime rate of one-half of the calculated rate under this method. Payless used that method between September 2010 and December 2012.
The remedies that the workers are requesting from the court include: (1) the difference between the legally required amount of overtime and the amount that they received under the disputed system and (2) an award of expenses related to presenting their legal arguments.
Overtime laws simply require that employers pay a non-exempt worker one-and-one-half times the amount of his or her standard hourly pay rate for each hour worked in a week above the threshold number of hours under a state’s labor laws. The threshold number of hours is 40 under Pennsylvania law.
Problems related to paying required overtime extend beyond simply not giving someone the additional compensation for the extra hours worked. Some employers: (1) use the illegal fluctuating workweek system that is at the heart of this lawsuit, and/or (2) require that employees work off the clock to avoid having them exceed the threshold amount.