The opinion of the court was delivered by: Judge Cathy Bissoon
For the reasons that follow, Defendant's Motion for Summary Judgment (Doc. 45) will be denied, and the Court holds that payment of overtime under the fluctuating workweek method, at one-half times an employee's "regular" or "basic" rate, as opposed to one and one-half times (or more), is impermissible under 34 Pa. Code § 231.43(d)(3). The remainder of the parties' Motions (see Docs. 52, 54, 70, 71 & 73) will be resolved as described below.
A. Defendant's Motion for Summary Judgment (Doc. 45)
1. The Fluctuating Workweek Under the Pennsylvania Minimum Wage Act
The parties' disputes center around the fluctuating workweek method of overtime compensation. The origins of this method date back to a Supreme Court decision in 1942, and it subsequently has been reduced to federal regulation in 29 C.F.R. § 778.114. See generally Anthony J. Galdieri, Esq., The Fluctuating Workweek: How It Works, How It's Treated, How It's Perceived, 8 Pierce L. Rev. 157, 159 (Feb. 2010) (citing Overnight Motor Transp. Co. v. Missel, 316 U.S. 572 (1942)). As one commentator aptly summarized: [The fluctuating workweek method] allows an employer to pay an employee a fixed, weekly salary, regardless of the number of hours worked. Each week, the employee's fixed salary is divided by the number of hours worked during the week to determine the employee's regular rate of pay. Because the fixed salary is designed to compensate the employee upfront for some overtime, an employee is paid one-half her regular rate for every hour she works over forty, instead of one and one-half times her regular rate. Thus, the more the employee works and the more overtime the employee logs, the less . . . she is paid for each additional hour of overtime. This result is permissible because the employee's salary compensates the employee for some overtime upfront, allowing the employer to drop her hourly rate with every additional hour worked and to pay the employee at one-half her regular rate . . . for every hour worked over forty.
Id. at 159-60 (citing 29 C.F.R. § 778.114) (internal citations and footnotes omitted).*fn1
The question in this case is whether the fluctuating workweek method (hereinafter, "the FWW method") is permissible under the Pennsylvania Minimum Wage Act ("PMWA") and the regulations promulgated thereunder. Defendant maintains that the FWW method is permissible under 34 Pa. Code § 231.43(d)(3), which, in relevant part, states:
No employer may be deemed to have violated [the PMWA] by employing an employee for a workweek in excess of [40 hours] if, under an agreement or understanding arrived at between the employer and the employee before performance of the work, the amount paid to the employee for the number of hours worked by him in the workweek in excess of [40 hours] . . . [i]s computed at a rate not less than 1 1/2 times the rate established by the agreement or understanding as the basic rate to be used in computing overtime compensation thereunder . . . .
Defendant does not claim that its compensation policy is permissible under the provisions in Section 231.43(b), regarding wages paid on a "per-day" or "per-job" basis:
If the employee is paid a flat sum for a day's work or for doing a particular job without regard to the number of hours worked in the day or at the job . . ., his regular rate is determined by totaling all the sums received at the day rates or job rates in the workweek and dividing by the total hours actually worked.
He is then entitled to extra half-time pay at this rate for hours worked in excess of 40 . . . .
Id.; cf. Def.'s Br. (Doc. 46) at 6-11 (citing, in every instance, Section 231.43(d) as basis for permissibility of FWW method) and id. at 8 (stating that "it is irrelevant" whether Defendant's policy complied with Section 231.43(b)).*fn2
In deciding whether the FWW method complies with Pennsylvania law, the Court does not write on a blank slate. In Cerutti v. Frito Lay, Inc., 777 F. Supp.2d 920 (W.D. Pa. 2011), Judge Joy Flowers Conti rejected many of the same arguments presented here, made by one of the same law firms representing Defendant in this case. Judge Conti held that the defendant's payment of overtime under the FWW method, at one-half times the regular rate, failed to satisfy Pennsylvania Code Section 231.43(d), because that Section expressly requires overtime payment at a rate of one and one-half times the regular rate. Id. at 945. The undersigned agrees.
As Judge Conti observed, a plain reading of Section 231.43(d) requires Defendant to pay its employees in question at a "rate not less than 1 1/2 times the rate established by the [parties'] agreement or understanding as the basic rate." Id. (emphasis added). Defendant admittedly paid the employees only one-half time for all hours worked in excess of forty, consistent with the FWW method under the FLSA. See Def.'s Br. (Doc. 46) at 19. Had the Pennsylvania regulatory body wished to authorize one-half-time payment under Section 231.43(d), it certainly knew how to do so. See 34 Pa. Code § 231.43(b) (for work compensated on per day or per-job basis, employee is "entitled to extra half-time pay . . . for hours worked in excess of 40") (emphasis added). The state regulators were well aware of the federal regulations, as evidenced by their verbatim adoption of 29 C.F.R. § 778.112, regarding "day rate" and "job rate" employees. Compare 34 Pa. Code § 231.43(b) and 29 C.F.R. § 778.112 (containing identical language). As the court in Friedrich stated:
[T]he overtime compensation scheme outlined in the federal regulations was adopted at least as far back as 1950[, and t]he state regulations were adopted in 1977. . . . The fact that § 231.43(b) is analytically identical to the two federal regulations[, i.e., Sections 778.112 and 778.114] -- and exactly identical to one of them, § 778.112 -- indicates that [Pennsylvania's] Industrial Board of the Department of Labor and Industry knew about the federal regulations when drafting the state regulations. The Industrial Board adopted -- verbatim -- one of the regulations, but did not adopt the other. To hold that the Industrial Board intended to adopt both federal regulations, even though the language of only one appears in the state regulations, would be to ignore what the Industrial Board actually did. While it might be convenient for . . . multi-state employers if federal law and Pennsylvania law were identical on the issue of overtime compensation, the fact is that they are not.
Id., 833 F. Supp. at 476 (some citations and footnote omitted, emphasis added); see also generally Tasker v. DHL Retirement Savings Plan, 621 F.3d 34, 42 (1st Cir. 2010) (when regulatory body "includes particular language in one section . . . but omits it in another section [in] the same [area]," it is presumed that drafters "act[ed] intentionally and purposely in the disparate inclusion or exclusion") (citations and internal quotations omitted) and Russello v. U.S., 464 U.S. 16, 23 (1983) (rejecting argument that "differing language in . . . ...