Another Court Misinterprets Pennsylvania Law On Fluctuating Workweek

In September 2012, we reported on two decisions from the United States District Court for the Western District of Pennsylvania holding that the "fluctuating workweek" method of calculating overtime is not lawful under Pennsylvania law when the employer pays an overtime premium of one-half of the employee's regular hourly rate, in addition to the employee's salary. Foster v. Kraft Foods Global, Inc., 2012 U.S. Dist. LEXIS 121282 (W.D. Pa. Aug. 27, 2012); Cerutti v. Frito Lay, Inc., 777 F. Supp. 2d 920 (W.D. Pa. 2011). Last week, a judge from the Eastern District of Pennsylvania followed in the footsteps of Foster and Cerutti. While Verderame v. RadioShack Corp., Case 2:13-cv-02539 (E.D. Pa. July 10, 2014), did not break any new ground in its analysis, the fact that the court followed Foster and Cerutti should be of great concern to Pennsylvania employers who continue to use this method of calculating overtime that is lawful under the FLSA. Of course, these three federal court decisions are not binding on the state courts, which will have the final say on the matter.

As previously reported, these decisions overlook that while the Pennsylvania Code does not include language specifically tracking the FLSA's fluctuating workweek provision, it does authorize employers and employees to reach an "agreement or understanding" about how to achieve "time and a half" overtime compensation. In our view, these decisions incorrectly...