Hasan v. GPM Investments, LLC, No. 3:07 cv 1779 (SRU) (D. Conn. Aug. 27, 2012).

The Court’s decision in this case benefits employees by helping them recover more money for their unpaid overtime wages. The dispute dealt with how to calculate damages when an employer misclassified workers as exempt from overtime compensation. The employer argued the damages should be calculated using the fluctuating work week method. If an employee worked 52 hours per week and was paid a salary of $1200 per week, under this method the employee would be owed only $138.46 for unpaid overtime. However, the Court ruled that damages should be calculated using the time and a half method. Based on the same amount of hours worked and salary received in the example above, the employee would be owed $540 in unpaid overtime, which, as you can see, is substantially more money.

GPM (the employer) owns and operates a chain of convenience stores and gas stations. GPM hired Plaintiffs (employees) to work as “store managers” and paid Plaintiffs a fixed salary with no extra compensation for hours worked over forty. The Employees filed this lawsuit alleging that they were misclassified as exempt employees, thus, were entitled to overtime pay for hours worked in excess of 40 hours per week. According to GPM, it paid their store managers a fixed salary to account for a “fluctuating work week”. A “fluctuating work week” is when an employee’s hours vary from week to week and rather than submit them to unpredictable paychecks based on hours worked, the company paid them a fixed salary no matter how much time they spent on the job. Therefore, an employee’s rate of compensation would differ from week to week; the fewer the hours worked per week the higher the hourly rate, however, the longer hours worked the less their hourly rate. The Court decided that when an employer misclassifies an employee exempt from overtime, the employer cannot also demand that damages be calculated using the fluctuating work week method because, since being classified as exempt means the employees were not paid any overtime, all of the requirements under the fluctuating work week cannot be met. If the jury decides in favor of the employees, then the court will calculate the employees’ unpaid overtime using the time and a half method.

For more information regarding employees’ rights under Federal or State labor laws, please contact the employment lawyers at Fitapelli & Schaffer, (212) 300-0375, for a free consultation.