Wednesday, January 19, 2011

4th Circuit Rules on Computation of Unpaid Overtime in FLSA Cases

In a case that started out as a dispute over whether the plaintiffs were exempt under the administrative exemption under the Fair Labor Standards Act (FLSA), the Court of Appeals for the Fourth Circuit received a chance to rule on how unpaid overtime compensation should be computed. With respect to unpaid overtime compensation, the FLSA states:
Any employer who violates the provisions of [29 U.S.C. § 206 or § 207] shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. 29 U.S.C. § 216(b).
On remand, the district court cited and used the Supreme Court's decision in Overnight Motor Transportation Co. v. Missel, 316 U.S. 572 (1942) to determine whether the appropriate overtime premium was 50% or 150% of that regular rate for all hours worked over 40. The district court held that 50% is the answer and the 4th Circuit agreed. In doing so, the 4th Circuit noted that they were joining four other circuits: "The First, Fifth, Seventh, and Tenth Circuits all have determined that a 50% overtime premium was appropriate in calculating unpaid overtime compensation under 29 U.S.C. § 216(b) in mistaken exemption classification cases, so long as the employer and employee had a mutual understanding that the fixed weekly salary was compensation for all hours worked each workweek and the salary provided compensation at a rate not less than the minimum wage for every hour worked."

"Willfulness" was the other issue in this appeal and the 4th Circuit held that a genuine issue of material fact exists and the matter was remanded back down to the district court for a trial on the issue of willfulness.

The case is Desmond v. PNGI Charles Town Gaming, (4th Cir. 1/18/11).

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