Fluctuating Work Week

In Thomas v. Bed Bath & Beyond, Inc., the plaintiffs, employees of  Bed Bath & Beyond Inc. ("BBB"), claimed that their employer had underpaid overtime pay that was owed them.  BBB claimed that because the employees work week fluctuated from week to week, it was entitled to calculate such overtime pay under the fluctuating work week method, which is permitted under Supreme Court precedent and Department of Labor Rules,  Under this method, if an employee is receiving a guaranteed weekly salary, which he or she will be paid even if he or she works fewer than 40 hours a week, overtime is calculated as follows: (1) the weekly guaranteed salary is divided by the actual number of hours worked that week, setting the regular hourly rate for that week, (2) the regular hourly rate is divided in half and (3) this amount is added to all overtime hours.  The reason that such a method is allowed is because the employer is paying a guaranteed weekly salary regardless of whether the employee works 40 hours on any particular week.

The plaintiffs claimed that BBB was not entitled to use the fluctuating work week method because there were weeks where they had worked fewer than 40 hours and was not paid the guaranteed amount.  However, both the district court, on BBB's motion for summary judgment, which was granted, and on appeal, held that the reasons for such deviations had been adequately explained by BBB and did not warrant preventing BBB from using the fluctuating work week method.

The plaintiffs also argued that the fluctuating work week method could only be used when the employees' time fluctuated regularly, rather than occasionally.  The Second Circuit pointed out that the reason for the method was because the employer was paying a guaranteed amount and not because of regular fluctuation;.

The plaintiffs further argued that BB's policy of allowing employees who worked on a holiday or other day off to take such time off at a date of their choosing was inconsistent with the fluctuating work week method.  The Court rejected this argument.

The decision in this case can be found here.