On January 24, 2022, U.S. District Judge Madeline Cox Arleo denied Wal-Mart’s motion for partial summary judgement in Sundel Quiles, et al. v. Wal-Mart. The action arises from allegations that Wal-Mart misclassified the Plaintiffs as overtime-exempt employees in violation of the New Jersey State Wage and Hour Law (“NJWHL”) and New York Labor Law (“NYLL”).
Wal-Mart sought to limit the claims that Plaintiffs could bring to trial by arguing that even if Wal-Mart was found liable for Plaintiffs’ unpaid overtime claims, compensation should be calculated using the fluctuating workweek (“FWW”) method.
The FWW method calculates an employee’s hourly rate by dividing the employee’s fixed weekly salary by the numbers of hours worked in a week. Therefore, an employee’s hourly rate under the FWW model can fluctuate significantly based on the number of hours an employee works in a week. Walmart favors the FWW method because it presents a lesser amount of unpaid overtime wages than Plaintiffs seek.
In response, Plaintiffs assert that the FWW method cannot be used to calculate damages in misclassification cases generally and that the specific facts of this case render the FWW method inappropriate for the resolution of this action.
Plaintiffs assert that the federal Fair Labor Standards Act (“FLSA”) preempts New Jersey and New York state law. Pursuant to the FLSA, any hours worked by non-exempt employees in excess of forty hours must be paid “at a rate not less than one and one-half times the regular rate at which [an employee] is employed.” Previous cases interpreting the FLSA have also clarified that the FWW method can only be used to calculate overtime in certain circumstances.
For instance, in Overnight Motor Transportation Co. v. Missel, the Supreme Court read the FLSA to mean that the FWW method can only be used to calculate overtime pay for employees who understand that their fixed weekly pay compensates all work done within a week regardless of hours worked. Missel further clarifies that the FWW method may only be used to calculate overtime damages in misclassification cases if both the employer and employee understand that a fixed weekly salary is provided for all work in a week.
According to the Plaintiffs’ testimonies, there was no such understanding in this case. For example, Plaintiff Angela M. Cox testified that she “signed up for 48 hours a week. That was what my salary was reflecting,” implying that she did not understand her weekly pay to be time independent. As a result, Judge Arleo found “a genuine dispute of material fact as to whether the parties mutually understood that Plaintiffs’ salaries were intended to compensate them for all time worked,” thus rendering the claim inapt for summary judgment.
As of February 14, 2022, both parties have informed the Court of their intent to mediate.
Updates will be posted to this blog as the matter progresses. The case caption is Quiles et al v. Wal-Mart Stores, Inc., No. 2:16-cv-09479, filed in the United States District Court for the District of New Jersey.
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