Bed Bath & Beyond’s (BBB) effort to dismiss a class action lawsuit filed by Mashel Law, L.L.C. has failed. The class action alleges BBB violated New Jersey’s Wage and Hour Laws (NJWHL) by not paying its Assistant Store Managers (ASMs), Customer Service Representatives (CSRs) and Department Managers (DMs) in its New Jersey stores overtime wages at a rate of one and one-half (1 ½ times) an employee’s regular rate of pay. BBB claimed it had the right to pay these class of workers’ overtime at a rate of only one-half (1/2 times) their regular rate of pay through use of a fluctuating workweek method (FWW) when its employees’ work hours fluctuated from week to week. Under federal law, FWW provides for the payment of an unchanging salary that compensates an employee for all hours worked in a week regardless of whether the employee works fewer or greater than 40 hours a week, and payment for overtime hours at a rate of one-half employee’s regular rate of pay. 29 C.F.R. § 778.114(a).
To use FWW, an employer must satisfy five (5) requirements: 1) the employee must work hours that fluctuate week from week; 2) the employee must be paid a fixed salary that serves as compensation for all hours worked; 3) the fixed salary must be large enough to compensate the employee for all hours worked at a rate not less than the minimum wage; 4) the employee must be paid an additional one-half of the regular rate for all overtime hours worked; and 5) there must be a “clear mutual understanding” that the fixed salary is compensation for however many hours the employee may work in a particular week, rather than for a fixed number of hours per week. Id.; See O’Brien v. Town of Agawam, 350 F.3d. 279, 288 (1st Cir. 2003), Griffin v. Wake County, 142 F. 3d. 712, 716 (4th Cir. 1998). By example, for DMs working for BBB in New Jersey being paid $20.00 per hour, BBB contends by using FWW to calculate overtime wages, it was permitted to pay its DMs overtime wages of only $10.00 per hour rather than $30.00 per hour as Mashel Law, L.L.C. argues is required under NJWHL’s overtime provisions.
FWW does not enjoy uniform acceptance nationally under state wage and hour laws. For instance, while FWW is an accepted methodology for calculating overtime wages under New York’s wage and hour laws, Anderson v. Ikon Office Solutions, Inc., 833 N.Y.S. 2d. 1 (1st Dep’t 2007), it is not permitted under Pennsylvania’s wage and hour laws. See Foster v. Kraft Foods Global, Inc., 285 F.R.D. 343 (W.D. Pa. 2012); Cerutti v. Frito Lay, Inc., 777 F. Supp. 2d 920 (W.D. Pa. 2011). As for New Jersey, no statute has been adopted or amended permitting the use of FWW under state law when calculating overtime wages. Similarly, no New Jersey Department of Labor regulation has been adopted or amended to permit FWW for calculating overtime wages under the NJWHL. While there remains a dearth of New Jersey case law on this topic, there does exist a decision issued by Mark B. Boyd, former Commissioner of the New Jersey Department of Labor entitled New Jersey Department of Labor, Division of Workplace Standards, Office of Wage and Hour Compliance, et. al. v. Pepsi Cola Company, 2000 WL 34401845 (N.J. Adm.) decided August 29, 2000 (hereafter referred to as “the Pepsi-Cola Case”) rejecting the use of FWW for calculating overtime wages under New Jersey law.
The Pepsi-Cola Case was an action brought by the New Jersey Department of Labor (NJDOL) against Pepsi Cola on behalf of certain employees to collect unpaid overtime wages and administrative fees and penalties. The NJDOL brought this collection action under NJWHL. In his decision, Commissioner Boyd concluded the FWW method for calculating overtime wages used by Pepsi-Cola was not an acceptable methodology for calculating overtime wages under New Jersey’s Wage and Hour Law. The class action suit brought by Mashel Law, L.L.C remains pending against BBB.
If you believe you may have a legal claim worthy of a class action lawsuit, call the attorneys at Mashel Law (732) 536-6161 or fill out the contact form on this page for immediate help. At Mashel Law, located in Marlboro, New Jersey, we are dedicated to protecting the rights of employees.