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Williams v. General Nutrition Centers, Inc.

Supreme Court of Connecticut

August 17, 2017

COLE WILLIAMS ET AL.
v.
GENERAL NUTRITION CENTERS, INC., ET AL.

          Argued May 4, 2017

          Anthony J. Pantuso III, with whom, on the brief, were Richard E. Hayber, Joshua R. Goodbaum and Stephen J. Fitzgerald, for the appellants (plaintiffs).

          Robert W. Pritchard, pro hac vice, with whom were Lori B. Alexander and, on the brief, Matthew K. Curtin, for the appellees (defendants).

          Palmer, Eveleigh, McDonald, Espinosa, Robinson and D'Auria, Js. [*]

         Syllabus

         Pursuant to a state wage law (§ 31-76c), employees not exempt from overtime pay must be paid at least one and one-half times their ‘‘regular rate'' of pay for each hour they work in excess of forty hours in a week.

         Pursuant to a state wage regulation (§ 31-62-D4), when an employee is paid a commission as a part of his or her earnings, the regular hourly rate for the purpose of calculating overtime is to be determined by dividing the ‘‘employee's total earnings by the number of hours in the usual [workweek] . . . .''

         The plaintiffs, who were employed as managers at the defendants' retail stores in Connecticut, and who received sales commissions in addition to a base salary, sought damages from the defendants in federal court, claiming that the defendants' use of a certain method to calculate their rate of pay for the purpose of determining the amount they were entitled to in overtime pay violated state wage laws and regulations. The defendants used the fluctuating workweek method of calculating overtime pay, which is allowed under federal law, pursuant to which an employee's regular rate of pay is calculated by dividing total weekly pay by the number of hours he or she actually works in a given week. The regular rate of pay is then multiplied by one and one-half times for the hours beyond forty that an employee works that week to determine his or her overtime pay. The United States District Court certified to this court the question of whether a Connecticut employer may use the fluctuating workweek method to calculate overtime pay under state wage laws and regulations.

         Held:

         1. The state wage laws, including § 31-76c, did not preclude the defendants' use of the fluctuating workweek method of calculating the plaintiffs' overtime pay: the wage laws were silent with respect to how to calculate the regular rate of pay for all types of employees other than delivery drivers and sales merchandisers, and, by setting a specific formula for only those categories of employees, the legislature apparently did not intend to limit the formulas for calculating overtime pay for other categories of employees, including the plaintiffs; moreover, § 31-76c was nearly identical to the federal overtime statute (29 U.S.C. 207 [a] [1]), which has been construed by the United States Supreme Court to allow the use of the fluctuating workweek method.

         2. The plain meaning of the state wage regulations promulgated by the Department of Labor, including § 31-62-D4, requires mercantile or retail employers, such as the defendants, to determine an employee's regular rate of pay for the purpose of calculating overtime pay by dividing the employee's weekly pay by the hours the employee usually, rather than actually, works in a week, and, accordingly, the wage regulations precluded the defendants' use of the fluctuating workweek method to calculate the plaintiffs' overtime pay, as that method requires consideration of the hours the employee actually works; by setting forth a formula for retail employers, such as the defendants, to use when calculating overtime pay, the regulations left no room for an alternative formula, such as the fluctuating workweek method, the contrary interpretation of the regulations urged by the defendants was not supported by the text of § 31-76c and was unreasonable, the absence of enforcement action by the Department of Labor to preclude the use of the fluctuating workweek method, without more, did not establish an official agency interpretation in favor of the use of such method that was entitled to judicial deference, and, because the meaning of the regulations and statutes governing overtime were plain and ambiguous, this court declined to consider potentially contrary extratextual evidence such as the legislative history of the wage laws.

         Procedural History

         Action to recover damages for the defendants' alleged violations of Connecticut wage laws and regulations, and for other relief, brought to the United States District Court for the District of Connecticut, where the court, Bryant, J., denied the defendants' motion to dismiss; thereafter, the court, Bryant, J., certified a question of law to this court concerning the application of Connecticut wage laws and regulations.

          OPINION

          D'AURIA, J.

         Connecticut law requires employers to pay certain employees one and one-half times their ‘‘regular rate'' of pay for any overtime hours they work. General Statutes § 31-76c. Calculating overtime pay for employees paid a fixed hourly wage is straight for-ward-their ‘‘regular rate'' is their hourly wage, so they must be paid one and one-half times their hourly wage for each overtime hour worked. General Statutes § 31-76c. But for employees paid in whole or in part by commission, their average hourly rate will tend to fluctuate, leaving them without a readily apparent regular rate to use for calculating overtime pay. In the present case, we are asked to consider how employers must determine the regular rate for retail employees whose pay fluctuates each week because they receive commissions.

         I

         This case comes to us on a certified question from the United States District Court for the District of Connecticut. The factual record, although limited, contains the following facts. The plaintiffs, Cole Williams and Novack Lazare, worked as managers at General Nutrition Centers (GNC) stores in Connecticut, which are owned and operated by the defendants, General Nutrition Centers, Inc., and General Nutrition Corporation. The plaintiffs were paid a base weekly salary, plus commissions on sales of certain premium merchandise, and they received overtime pay whenever they worked more than forty hours in a week. Their base salaries were fixed, but their commission payments fluctuated week to week based on their sales.

         The defendants calculated the plaintiffs' overtime pay using a method allowed under federal law, commonly known as the fluctuating workweek[1] method (fluctuating method). See Overnight Motor Transportation Co. v. Missel, 316 U.S. 572, 579-80, 62 S.Ct. 1216, 86 L.Ed. 1682 (1942); 29 C.F.R. §§ 778.114 and 778.118 (2016). This method is used to calculate the regular rate for salaried employees whose work hours fluctuate week to week and for employees whose pay varies each week because of commissions. See Overnight Motor Transportation Co. v. Missel, supra, 579-80; 29 C.F.R. §§ 778.114 and 778.118 (2016). Because these employees do not have a consistent hourly rate of pay, their regular rate is calculated each week by dividing their total weekly pay by the number of hours they worked during the week. See 29 C.F.R. §§ 778.114 and 778.118 (2016). This formula yields their regular rate for that week, which is used to determine their overtime pay. For example, if an employee has a weekly salary of $500 and works fifty hours in a given week, his regular rate is $10 per hour ($500/50), and his overtime rate is $15 per hour ($10 x 1.5). Because the employee has received only $10 per hour for each hour worked, he must be paid an additional $5 for each overtime hour to bring his pay to the required $15 per hour rate for all hours in excess of forty.

         Under the fluctuating method, the employee's regular rate, and, therefore, his overtime pay rate, decreases as he works more overtime hours if he is paid a fixed salary. See Overnight Motor Transportation Co. v.Missel, 316 U.S. 579-80; Stokes v.Norwich Taxi, LLC, 289 Conn. 465, 479-80, 958 A.2d 1195 (2008). For example, suppose an employee is paid $500 per week and, in the first week, works fifty hours and, in the second week, works sixty hours. In the first week, the employee's regular rate is $10 per hour ($500/50); in the second week, it is $8.33 per hour ($500/60). The employee is entitled to one and one-half times his regular rate of pay for overtime hours, meaning ...


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