9th Circuit Federal Court Rules FWW Method for Calculating Overtime Pay in Misclassification Cases is Inappropriate – Los Angeles Wage & Hour Claims Attorneys Blumenthal, Nordrehaug & Bhowmik

by Norman B. Blumenthal on February 20, 2013

When calculating the back pay due an employee for overtime pay the Department of Labor (DOL) has approved using a calculation of 1.5 times the employee’s regular rate of pay.  To calculate the regular rate of pay, the employee’s salary is divided by the number of hours worked in a particular workweek.

Five federal Court of Appeals, the 1st, 4th, 5th, 7th, and 10th, have addressed the question of the proper method to calculate overtime back pay.  All five have endorsed the DOL method.  However, a recent 9th Circuit case has taken a different approach.

In Blotzer v. L-3 Communications Corp., the 9th circuit district court in Arizona held that to calculate the overtime pay due to employees being misclassified, the DOL’s FWW method is inappropriate.  The employee has a FWW when:

  1. the employee’s hours fluctuated from week-to-week;
  2. the employee received a fixed salary that did not vary regardless of the number of hours worked during the week;
  3. the fixed salary was sufficient to provide compensation every week at a regular rate that was at least equal to the minimum wage;
  4. the employer and employee shared a “clear and mutual understanding” that the employer would pay the fixed salary regardless of the number of hours worked; and
  5. the employee received overtime compensation for hours worked in excess of forty, not less than one-half the rate of pay.

According to the Arizona district court, under the DOL’s FWW method there is no “clear mutual understanding” about a fixed salary for fluctuating employee hours the FWW method.

Blumenthal, Nordrehaug & Bhowmik is an experienced California employment law firm with offices located in San Diego, San Francisco and Los Angeles. The firm dedicates its practice to contingency fee employment law work for issues involving misclassification as a salaried worker exempt from overtime, failure to pay vacation wages, misclassification as an independent contractor, off-the-clock work, wrongful termination, discrimination and other California labor laws.

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