Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

© 2022 Seyfarth Shaw LLP Massachusetts Wage & Hour Peculiarities, 2022 ed. | 79 acceptance of the same salary each week. 428 In addition, the employer should be cognizant that this method of compensation is administratively complex and potentially burdensome. Given the complexities, the employer should seek the advice of legal counsel prior to implementing a fluctuating workweek method for overtime compensation. 429 10. Calculation of the Regular Rate Using the Fixed Salary Method Under federal law , 430 non-exempt employees may be paid a salary for a fixed (as opposed to a fluctuating) number of hours. Under this model, the salary covers the employee’s straight-time pay up to the specified number of hours, and the employer pays a separate half-time overtime premium for the hours between 40 and the specified number of hours (assuming the specified number of hours is greater than 40). Because the salary does not include straight-time for hours worked in excess of the specified number of hours, those hours must be compensated at one and one-half times the regular rate. As with the FWW method, the best practice is to have an employee sign a written agreement that describes the fixed salary method in clear and unambiguous terms prior to paying the employee pursuant to this method. The DOL provides the following example : 431 “If an employee whose maximum hours standard is 40 hours was hired at a fixed salary of $275 for 55 hours of work, he was entitled to a statutory overtime premium for the 15 hours in excess of 40 at the rate of $2.50 per hour (half-time) in addition to his salary, and to statutory overtime pay of $7.50 per hour (time and one-half) for any hours worked in excess of 55.” 432 The employee’s “regular rate in any overtime week of 55 hours or less is determined by dividing the salary by the number of hours worked to earn it in that 428 Several circuit court s and the DOL have also approved use of the FWW as a method to calculate back wages in exempt status misclassificat ion cases where the employee had a clear understanding that he or she would be paid a salary and would not receive overt ime for hours over forty. See Ransom v. M. Patel Enters., Inc ., 734 F.3d 377, 386 n.14 (5th Cir. 2013); Desmond v. PNGI Charles Town Gaming , 630 F.3d 351 (4th Cir. 2011); Urnikis-Negro v. Am. Family Prop. Servs ., 616 F.3d 665, 671 (7th Cir. 2010); Clements v. Serco , 530 F.3d 1224, 1230-31 (10th Cir. 2008); Valerio v. Putnam Assocs ., 173 F.3d 35 (1st Cir. 1999); Blackmon v. Brookshire Grocery Co. , 835 F.2d 1135 (5th Cir. 1988); DOL Opinion Let ter 2009-3 (Jan. 14, 2009). Other circuit court s have not addressed the issue, however, and some dist rict court s have rejected the computat ion of back wages in misclassificat ion cases based on the half-t ime (FWW or fixed salary) method. See, e.g., Costello v. Home Depot USA, Inc ., 944 F. Supp. 2d 199, 202-08 (D. Conn. 2013); Hasan v. GPM Invs., LLC , 896 F. Supp. 2d 145 (D. Conn. 2012). 429 The FLSA contains provisions for an addit ional alternat ive method of calculat ing overt ime—the Belo plan. Named after a U.S. Supreme Court decision involving the A.H. Belo Corporat ion, this plan is used when an employer wishes to assure a constant weekly salary to employees whose work has inherent ly irregular hours. See Walling v. A.H. Belo Corp. , 316 U.S. 624, 62 S. Ct . 1223, 86 L.Ed. 1716 (1942). It is sanct ioned by the FLSA and allows employers to compensate employees for overtime with a fixed wage where the nature of the work performed necessitates irregular hours of work and there are significant variat ions in weekly hours of work both above and below forty hours per week. See 29 C.F.R. §§ 778.400-778.414. Employers that use the Belo plan must pay a fixed, guaranteed weekly wage which consist s of the employee’s regular rate plus a predetermined amount of overt ime at the FLSA rate. Id . This method is very complex and it s use is even more rest rict ive than the FWW method. The Massachuset t s legislature has not specifically adopted the Belo plan method of calculat ing overt ime, and no Massachuset t s court s have yet addressed whether this methodwould be acceptable under the Massachuset t sMinimum Fair Wage Law. 430 Massachuset t s law is silent as to whether the fixed salary method is available under Massachuset t s law. The applicable Massachuset t s regulat ion, 454 C.M.R. § 27.03(3), explicit ly approves the FWW method but does not address the fixed salary method. We recommend consult ingwith legal counsel to determine the availability of this method in Massachuset t s. 431 Although this example is helpful, the salary would not be lawful in Massachuset t s because it result s in the employee being paid less than the minimum wage for each hour worked. 432 29 C.F.R. § 778.325.