Conn. Supreme Court Boosts Overtime Pay, Strikes ‘Fluctuating’ Workweek Rule

Aug 21 2017

As it appeared in the Connecticut Law Tribune

ROBERT STORACE, The Connecticut Law Tribune

The Connecticut Supreme Court ruled Thursday that the federal fluctuating workweek used to calculate overtime pay for a limited group of workers is no longer permitted in the state.

The justices — in their 6-0 ruling — said the fluctuating workweek method still could apply in other cases not involving retail employees, but that it would no longer be allowed when it came to the thousands of retail workers paid on commission.

At issue is a September 2014 lawsuit filed by two former General Nutrition Center store managers who claimed they were shortchanged under the fluctuating workweek method used in most states.

The plaintiffs argued GNC’s method improperly bases overtime pay on the number of hours employees work in an average week instead of based on the amount of time they work in excess of 40 hours.The high court noted that under the fluctuating method, the employer’s regular rate and, therefore, their overtime pay rate, “decreases as he works more overtime hours if he is paid a fixed salary.” That is at the crux of why the lawsuit was filed and why the Connecticut Supreme Court, which had never ruled on the matter before, is so important, according to one of the plaintiffs’ attorneys.

“We are breaking new ground here,” said Anthony Pantuso III, of counsel for The Hayber Law Firm in New Haven. “For attorneys, this means that if you have an employee being paid this way, it really does clarify the laws on overtime in Connecticut.”

Under the fluctuating workweek, a salaried employee who works 50 hours a week is going to receive a lower hourly rate than an employee who works 45 hours a week, Pantuso said.

Under the new guidelines, which is a complicated six-step process, employees working on commission would get more overtime pay. For example, based on getting a set salary of $700 a week and a commission of $100 a week, they’d get $80 in overtime by working 50 hours that week under the fluctuating workweek. But they’d get $125 in overtime pay under the new method of calculating pay in Connecticut.

In its 13-page ruling, the justices wrote that “The wage order, if read in light of the defendants’ interpretation of workweek, i.e., a fixed workweek period, would make no sense.”

The Connecticut Supreme Court states that GNC’s interpretation of “usual work week” is unreasonable and not supported by facts.

GNC uses the federal standard in its definition. That standard states an employee’s workweek is a fixed and regularly recurring period of 168 hours, or seven consecutive 24-hour periods, that the employer uses for its weekly payroll accounting.

The high court, in its ruling, says Connecticut does not have to adhere to the federal policy when it comes to certain employees.

Attorney Mark Mercier, who works in wage and employment law, said other employees could look at this decision and argue that they too should be exempt from the fluctuating workweek method.

“Now, there could be claims by some employees that you never should have been using it in the first place,” said Mercier, a partner with Beck & Eldergill in Manchester who was not involvement in the GNC case. “Whether or not the Department of Labor or the Legislature takes action to restrict the fluctuating workweek method on some other occupations is a different matter.”

Mercier said he’s a “skeptic” of the rules pertaining to the fluctuating workweek “because I think it is capable of great abuse by the employer. The fluctuating workweek method says your wages cover you for straight time for all hours worked and that the only sum that is owed you is the overtime premium, which is not right. It should be based on an underlying 40 hour workweek.”

Cole Williams and Novack Lazare, the two plaintiffs in the case, no longer work for GNC. They will get back pay under the ruling, although the exact amount hasn’t been calculated, according to Pantuso.

GNC stopped using the fluctuating method during the litigation, said Pantuso, who is still waiting to see whether U.S. District Judge Vanessa Bryant will allow a class action against GNC to move forward. If so, all GNC managers and assistant managers throughout the state who worked between September 2012 and 2014 would be eligible for back pay. “We are talking about hundreds of people,” Pantuso said.

GNC was represented by shareholder Robert Pritchard, office managing shareholder Lori Alexander and associate Matthew Curtin, all of Littler, Mendelson.

Assisting Pantuso were Richard Hayber, principal of The Hayber Law Firm; and Joshua Goodbaum and Stephen Fitzgerald, partners with Garrison, Levin-Epstein, Fitzgerald & Pirrotti in New Haven.

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