Connecticut Prohibits the Fluctuating Workweek Method of Calculating Overtime for Retail Employees

Overview.   Connecticut retailers should be mindful of a recent decision by the Connecticut Supreme Court (Williams v. General Nutrition Centers, Inc.), holding that the regular rate of pay for retail employees should be calculated using the “usual” hours worked by those employees, not the “actual” hours worked.  Thus, prohibiting retail employers from utilizing the “fluctuating workweek” method of calculating overtime.  

Details.  Under the federal Fair Labor Standards Act, the fluctuating workweek (FWW) method may be used to calculate overtime pay for employees without a consistent hourly rate of pay, e.g., salaried employees whose work hours fluctuate above and below 40 hours per week or employees who receive commissions. Note: Comprehensive Services does not recommend this as a best practice. 

Using the FWW method, an employee’s “regular rate” of pay is calculated each week by dividing his total weekly pay (including any commissions) by the actual number of hours he worked that week. The “overtime rate” is calculated by multiplying this regular rate by 1.5. For example, if an employee has a weekly salary of $500 and works 50 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 attain the required $15 per hour rate for all hours in excess of 40.

Connecticut’s wage and hour law similarly requires that certain employees receive 1.5 times their regular rate of pay for overtime hours worked.   However, in interpreting the state’s statutory provision, the state Department of Labor published Wage Order § 31-62-D4 (“Wage Order”) establishing that “[w]hen an employee is paid a commission in whole or in part of his earnings, the regularly hourly rate for the purpose of computing overtime shall be determined by dividing the employees total earnings by the number of hours in the usual work week[.]”However, this Wage Order applies only to employees in the “mercantile trade,” which generally has been defined as those employed in the retail sales industry.  Even more recently, the Connecticut Supreme Court agreed that “usual work week” means the hours “usually worked in a week” rather than the hours “actually worked” in a given week. 

In Williams v. General Nutrition Centers, Inc. a group of managers at GNC’s retail stores claimed they were paid a base weekly salary plus commissions on premium merchandise sold. They also were paid overtime when they work more than 40 hours per week.  According to the managers, their overtime pay was wrongly calculated using the FWW pay method. They argued the Wage Order directs that their pay be based on the number of hours they usually worked, as opposed to the number of hours they actually worked in a particular week.

The Connecticut Supreme Court agreed that the FWW pay method was not permitted with respect to retail employees subject to the Wage Order.  Because an employee’s “usual” workweek and his “actual” workweek are not necessarily the same, the use of the FWW method is prohibited when calculating overtime pay for retail employees covered by the Wage Order.

Call to Action:  Connecticut retailers should cease using the fluctuating workweek method of calculating overtime for its salaries non-exempt employees. 


Produced in cooperation with Jackson Lewis, P.C.