A few days ago, Daniel Schwartz posted in his Connecticut Employment Law Blog an article about a recent Second Circuit decision disapproving the use of the fluctuating work week (FWW) method of calculating overtime when employees misclassified as exempt are deemed to be non-exempt.

In this case, Hasan v. GPM Investments, LLC, the employees were classified as exempt by their employer and then filed a collective action, seeking a determination that they were non-exempt.  The Second Circuit was ruling on the validity of a pre-trial motion to exclude the use of the FWW method to calculate damages if the workers were deemed non-exempt.

The Court held that the FWW method could not be used because the parties had never agreed to be paid at overtime rates that would vary with every week, depending on the number of hours they worked.  The Court also held that employees subject to FWW overtime should also receive their full salary for these weeks in which their hours totaled less than forty, but this never happened.  Indeed, the job description for these so-called Managers specified that they work fifty-two (52) hours per week.

David points out that this case highlights the potential dangers for employers in trying to minimize damages in an exemption case by arguing that the lower-paying FWW method should be used to determine damages.  I agree.  I have often counseled employers that misclassified workers will receive overtime at the FWW rate and other courts have approved this method of payment.  I have also seen the Departments of Labor, federal and state, use the FWW method when they determine that workers have been misclassified.

What this portends for the future is unsure.  A split in the Circuits usually means that at some point the US Supreme Court will decide the issue.

To be continued….