In Minimum Wage Case, Justices Lament Having to Assume Rule-Making Duties of State Agency

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The Pennsylvania Supreme Court will decide how the state’s overtime laws should be interpreted after hearing oral arguments in a case challenging a formula for calculating overtime.

Salaried employees with General Nutrition Centers (GNC) said in a 2013 lawsuit filed in the Allegheny County Court of Common Pleas that the company operated under a fluctuating workweek model that divides their salary by the number of hours worked and then divides the rate in half to calculate overtime.

The workers argued they were entitled to time and half of their regular rate for overtime hours worked per the state’s Pennsylvania Minimum Wage Act. The court agreed and awarded the employees $1.7 million in back pay. The Pennsylvania Superior Court upheld the trial court’s decision.

Paying overtime using the fluctuating workweek model is legal under the Federal Labor Standards Act., GNC attorney Robert W. Pritchard said. But the state Department of Labor did not clarify if those standards apply to the state law when adopting portions of the FLSA in 1977’s Pennsylvania Minimum Wage Act.

Since the Labor Department uses the FLSA, it should apply statewide as well, Pritchard told the court.

While the 0.5 percent allowance for overtime pay is an alternative method of the FLSA, it doesn’t apply to the Pennsylvania Minimum Wage Act, Michael Simon, who represented the employees, said.

"His [Pritchard’s] view is that the Pennsylvania Legislature intended to adopt FLSA standards," Justice Max Baer asked Simon. "Why is that wrong?

Simon said the question is whether overtime calculated at half the hourly rate satisfies the requirements of the Pennsylvania Minimum Wage Act.

"And we are saying affirmatively it does not and it cannot," Simon said. "The folks entered into an agreement that is unlawful under the Pennsylvania Minimum Wage Act. They [GNC attorneys] are basically asking the court to import wholesale the FLSA into the PMWA.

The justices said they were concerned about wading into a public policy debate by having to interpret whether state laws include all of the FLSA, a question that should have been answered by the Department of Labor.

"Our courts, all courts, get consistent criticism for determining public policy, and this is the classic example of where the Legislature instructed the Department of Labor to make this determination, and they’ve taken no action," Justice Christine Donohue said. "It’s not our function to interpret the intent of an agency that doesn’t act. It’s our responsibility to determine the intent of the statute."

Baer concurred with Donohue’s assessment.

"We don’t want to do policy because that’s a sister branch of government, but we are compelled to because we took the case and we have to decide it," Baer said.

The justices will hold a private vote on the case and issue a ruling later this year.

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