- The Connecticut Supreme Court ruled that the Fair Labor Standards Act's (FLSA) "fluctuating workweek" (FWW) method of calculating overtime pay cannot be used for the state's retail workers paid on commission, the CT Law Tribune reports.
- The plaintiffs, former employees of General Nutrition Centers (GNC), argued that they were being short-changed under the federal calculation method because it bases overtime on the average number of hours worked per week instead of the actual hours worked beyond 40 in a workweek.
- In siding with the plaintiffs, the court said that under the FWW calculations, salaried employees' pay decreases the more overtime they work, according to the CT Law Tribune.
The FWW method of payment permitted under the FLSA hasn't been widely adopted, but more employers were considering its use as a way to cope with the now-halted overtime rule.
Employers must meet several criteria to calculate overtime pay using that method. This includes requirements such as: work hours vary; parties have agreed to its use ahead of time; the resulting hourly pay rate is at least minimum wage; and employers pay workers the agreed upon salary, even if they don't work a full schedule.
It remains to be seen whether the Connecticut ruling will be extended to other employee groups, but employers with workers in the state may want to keep a close eye on the issue, especially because wage and hour claims can easily turn into collective action lawsuits.
And as for employers thinking about using the method because of the overtime rule, drastic changes to compensation plans may not be necessary quite yet. The U.S. Department of Labor has abandoned the Obama-era version of the rule and filed a request for information (RFI) to determine whether a lower threshold would be appropriate. The deadline for comment is Sept. 25.