It’s been a rough year for RadioShack. One that, for me, came out of nowhere.
So, of to a great start in February, I thought things were looking up for RadioShack. But, then they announced they were closing 1,100 stores and one analyst later cut RadioShack’s stock price target to $0. ZERO!
And, then, last week, in this opinion, a Pennsylvania federal court delivered a swift kick to the RadioShack’s you know what, when it held that RadioShack use of the “fluctuating workweek” method for calculating overtime violates the Pennsylvania Minimum Wage Act.
We’ve talked about the fluctuating workweek here before, in a post I trust maybe three of you read. Because wage-and-hour posts appeal to my readers about as much as Paula Deen likes kale and quinoa.
Maybe, now would be a good time to cue up the music.
For those who care — hey, welcome back you three — basically, the fluctuating workweek method of calculating overtime compensation allows an employer to pay a non-exempt employee a fixed, weekly salary, regardless of the number of hours worked. OT is then paid out at one-half times the regular rate of pay (rather than one and one-half times the regular rate, as is the default for payment of OT). The regular rate of pay is determined by dividing the fixed salary by the total number of hours worked in a workweek. This method of paying OT benefits the employer if employees generally work more than 40 hours per week (because the effective hourly rate is driven down).
But, unlike under federal law, the supporting regulations to the PMWA require that even if an employer reaches an agreement with its employees before work is performed as to a regular rate of pay, the employer must still pay OT at a “rate not less than 1 ½ times the rate established by the agreement.”
Between the regulations two prior cases (this one and this one), which both held that the fluctuating workweek method of overtime calculation is impermissible under the PMWA, the Court concluded that RadioShack too had violated the PMWA by not paying out OT at one and one-half times the regular rate.
At this point, it’s safe to say that PA employers who utilize the fluctuating workweek are just asking for trouble.