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Chevalier v. General Nutrition Centers, Inc.

Supreme Court of Pennsylvania

November 20, 2019

TAWNY L. CHEVALIER AND ANDREW HILLER, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Appellees
v.
GENERAL NUTRITION CENTERS, INC. AND GENERAL NUTRITION CORPORATION, Appellants TAWNY L. CHEVALIER AND ANDREW HILLER, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Appellees
v.
GENERAL NUTRITION CENTERS, INC., AND GENERAL NUTRITION CORPORATION, Appellants

          ARGUED: April 10, 2019

          Appeal from the Order of the Superior Court entered December 22, 2017 at Nos. 1437 WDA 2016, 92 WDA 2017, affirming in part and reversing in part the Judgment of the Court of Common Pleas of Allegheny County entered December 29, 2016 at No. GD 13-017194 and remanding.

          SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

          OPINION

          BAER JUSTICE.

         In this case, we consider the calculation of overtime compensation for non-exempt salaried workers under the Pennsylvania Minimum Wage Act of 1968 (PMWA), 43 P.S. §§ 333.101 - 115, and the related regulations adopted by the Pennsylvania Department of Labor and Industry (Pennsylvania Regulations), 34 Pa. Code §§ 231.41-43. Specifically, we address whether these statutory and regulatory provisions allow for the usage of the Fluctuating Work Week method (FWW Method) for calculating overtime compensation for salaried employees working fluctuating hours. As explained in detail below, we affirm the Superior Court's decision rejecting the use of the FWW Method under the PMWA and the Pennsylvania Regulations, which we find distinguishable from the federal Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 - 219, and related regulations, 29 C.F.R. §§ 778.0 - 778.603 (Federal Regulations), which overtly adopt the FWW Method for salaried employees working fluctuating hours, 29 C.F.R. § 778.114 (entitled "Fixed salary for fluctuating hours").

         In September 2013, Tawny L. Chevalier filed a class action complaint against General Nutrition Centers, Inc., a Delaware corporation, and General Nutrition Corporation, a Pennsylvania corporation (collectively GNC).[1] Chevalier had previously been employed by GNC as a store manager and senior store manager, earning a set weekly salary plus commissions, regardless of the number of hours she worked in a given week. GNC additionally paid her overtime for any hours worked in excess of forty hours in a week by utilizing the FWW Method explained below. Essentially, Chevalier argued that the FWW Method did not satisfy the PMWA's requirement that employees "shall be paid for overtime not less than one and one-half times the employe[e]'s regular rate." 43 P.S. § 333.104(c).[2]

         She later amended her complaint to add Andrew Hiller, also a former GNC store manager, as a named plaintiff and class representative (collectively, Plaintiffs). Plaintiffs asserted that they were bringing the class action "on behalf of all former or current managers, assistant managers and senior store managers and other 'non-exempt' GNC employees that are paid overtime based upon the 'Fluctuating Work Week Method' . . . of overtime compensation." Compl. at ¶ 5.[3] The Plaintiffs worked at GNC between 2009 and 2011.

         I. Background

         Before addressing the parties' arguments, we first briefly describe the mechanics of the FWW Method in the context of the relevant Federal and Pennsylvania statutes and regulations. A starting point for understanding the FWW Method is the requirement in both the federal and state statutes that employers pay employees overtime compensation of "not less than one and one-half times [the employee's] regular rate" for all hours worked in excess of forty during a week. See 29 U.S.C. § 207(a)(1); 43 P.S. § 333.104(c).[4] This requirement is fairly straightforward for employees who earn a set hourly wage as it merely requires multiplying the number of hours over forty by one and one-half times the hourly rate. The determination of what constitutes "one and one half times the regular rate," however, is more complicated for employees who are paid pursuant to non-hourly compensation arrangements, including payment for work completed, commissions, or salaries. For some of these compensation arrangements, the Pennsylvania and Federal Regulations provide guidance concerning the permissible methods of calculating the "regular rate," with the Federal Regulations addressing a significantly greater variety of compensation arrangements than what is provided in the Pennsylvania provisions.[5]

         As is relevant to the case at bar, the Pennsylvania provisions do not specifically address a method for calculating overtime for employees, such as Plaintiffs, who are paid a set weekly salary regardless of the hours worked each week. For these employees, the hourly rate of pay necessarily "fluctuates" each week based upon the number of hours worked, given that the agreed upon salary stays constant while the number of hours worked varies from week to week.

         Unlike the Pennsylvania provisions, the Federal Regulations specifically address the overtime compensation of salaried employees working fluctuating hours, providing at least two potential methods of calculation, as will be discussed in detail infra. Relevant to this case, federal Section 778.114, entitled "Fixed Salary for Fluctuating Hours," explicitly permits employers to use the FWW Method, 29 C.F.R. § 778.104. Indeed, the permissibility of the FWW Method under federal jurisprudence predates the adoption of the regulation. In 1940, the FWW Method was set forth in the Department of Labor's Interpretive Bulletin Number 4 and was approved two years later by the United States Supreme Court in Overnight Motor Transportation Company, Inc. v. Missel, 316 U.S. 572 (1942).

         Under the FWW Method, the salaried employee's "regular rate" of pay is determined by dividing the total of the weekly salary by the number of hours actually worked that week. This construct presumes that the weekly salary compensates the employee for the "straight time" worked during the week, including any hours worked in excess of forty. Thus, in regard to the statutory requirement that an employee be paid overtime of "one and one-half times the regular rate," an employer utilizing the FWW Method arguably has paid the employee the initial "one . . . times the regular rate" through the payment of the weekly wages for the hours worked. The employer then accounts for the overtime requirement of an additional "one-half times the regular rate" by multiplying the number of hours in excess of forty by 0.5 times the regular rate, which we will refer to as the "0.5 Multiplier."[6] As explained in detail below, Plaintiffs assert that overtime compensation should be calculated by multiplying the number of hours worked in excess of forty by 1.5 times the regular rate, which we will refer to as the "1.5 Multiplier."

         II. Trial Court Proceedings

         In support of their class action complaint, Plaintiffs contrasted the explicit federal adoption of the FWW Method for salaried employees working fluctuating hours with the absence of a similar provision under the PMWA or the Pennsylvania Regulations. As noted, instead of the FWW Method, Plaintiffs asserted that overtime under the PMWA for salaried employees with fluctuating hours should be calculated by using the 1.5 Multiplier.[7] Plaintiffs sought restitution of all overtime wages due to the class, as well as costs of litigation and reasonable attorney fees. Am. Compl. at ¶ 27.

         After GNC filed its answer and new matter, the trial court ordered the parties to file cross motions for summary judgment, presumably recognizing that the dispute raised a pure question of law regarding the permissibility of the FWW Method for salaried employees working fluctuating hours under the PMWA and the relevant Pennsylvania Regulations, 34 Pa. Code §§ 231.41-43. In response, Plaintiffs filed a Motion for Partial Summary Judgment or in the Alternative, for Judgment on the Pleadings, and GNC filed a Motion for Summary Judgment.[8]

         In their several filings, Plaintiffs reiterated their argument which they continue to pursue before this Court, claiming that the FWW Method's use of the 0.5 Multiplier violated the PMWA-mandated payment of "one and one-half times the regular rate." They also rejected GNC's suggestion that the PMWA should be interpreted consistently with federal Section 778.114, adopting the FWW Method. Rather than incorporating the federal provisions in toto, Plaintiffs maintain that the PMWA and the Pennsylvania Regulations selectively adopted aspects of the federal provisions with the intent to provide greater protection for Pennsylvania's workers and did not embrace Section 778.114. Thus, Plaintiffs argued that GNC violated the PMWA by failing to utilize the 1.5 Multiplier.

         In response, GNC asserted that the FWW Method is permissible under the PMWA. GNC maintained that Plaintiffs' calculation of overtime pay would override the clear statutory mandate of "one and one-half times the regular rate." GNC claimed that under Plaintiffs' formulation salaried employees would receive two and one-half times their regular rate of pay because the salary provides the initial payment for each hour worked and employees would then receive an additional 1.5 times for every hour worked in excess of forty. GNC argued that the FLSA should be used as a guide for interpreting the PMWA, given that the PMWA adopted substantial aspects from its federal counterpart. It contended that if the General Assembly had intended to deviate from the FLSA it would have done so explicitly.

         In October 2014, the trial court denied GNC's motion for summary judgment and granted Plaintiffs' motion for partial summary judgment, holding that the FWW Method violated the PMWA. In so doing, the court initially opined that the PMWA and the Pennsylvania Regulations did not provide an unambiguous answer to "the question of whether an employer can use the fluctuating workweek to calculate the overtime pay owed to a salaried employee." Tr. Ct. Op. at 10. The court also recognized that the ambiguity had yet to be resolved by a Pennsylvania appellate court. It next discounted the federal cases, applying Pennsylvania law, which had rejected use of the FWW Method in connection with a specific statutory provision related to preexisting employment agreements establishing a "basic rate," specifically 34 Pa. Code §§ 231.43(d)(3) (the "Basic Rate Provision").[9] Tr. Ct. Op. at 10-12 (discussing Verderame v. RadioShack Corp., 31 F.Supp.3d 702 (E.D. Pa. 2014); Foster v. Kraft Foods Global, Inc., 285 F.R.D. 343, 347 (W.D. Pa. 2012); and Cerutti v. Frito-Lay, 777 F.Supp.2d 920, 944-45 (W.D. Pa. 2011)). The trial court concluded that these federal cases were inapposite because they addressed the Basic Rate Provision, which both GNC and Plaintiffs agreed did not apply in the case at bar.

         In determining whether the PMWA should be interpreted to encompass the FWW Method explicitly adopted in the FLSA, the trial court related the histories of the two statutory provisions. It observed that the FLSA was adopted in 1938 and provided for overtime payment of "one and one-half times the regular rate," 29 U.S.C. § 207(a)(1), without defining the term "regular rate" or providing explicitly for the FWW Method. The court noted that within four years of the enactment of the FLSA, the United States Supreme Court approved the use of the FWW Method for salaried employees working fluctuating hours in Missel, 316 U.S. 572, which was incorporated into the Federal Regulations in 1950, and eventually recodified as 29 C.F.R. § 778.114.

         The trial court further observed that when Pennsylvania adopted the PMWA and the relevant regulations, it utilized substantial language from the FLSA and the Federal Regulations but did not specifically incorporate the FWW Method for salaried employees working fluctuating hours.[10] The court rejected GNC's argument that Pennsylvania's adoption of the phrasing "one and one-half times the regular rate" along with large portions of the federal provisions demonstrated a "uniformity of purpose between federal and state law" such that it should be deemed an incorporation of the entire federal scheme regarding the "regular rate." Tr. Ct. Op. at 15.

         The trial court instead emphasized the PMWA's language mandating that overtime would be "prescribed in regulations adopted by the Secretary." Tr. Ct. Op. at 16 (quoting 43 P.S. § 333.104(c)). The court viewed this language as expressly delegating to Pennsylvania's Secretary of Labor and Industry the task of "answering the unanswered questions" related to the calculation of overtime. The court concluded that this provision demonstrated an intent not to adopt the FLSA and its regulations in toto, but only those provisions adopted by the Secretary. Moreover, the court acknowledged that the absence of a provision applying the FWW Method to salaried employees suggested an intent not to incorporate that method, in light of Pennsylvania's adoption of numerous other sections of the federal law. The court found this argument especially compelling given that the Secretary had promulgated regulations that copied nearly verbatim the federal provision approving a calculation methodology essentially the same as the FWW Method in regard to employees subject to day or job rate compensation but did not adopt the FWW Method for salaried employees working fluctuating hours. Tr. Ct. Op. at 17 (comparing the adoption of 29 C.F.R. § 778.112 into 34 Pa. Code § 231.43(b) and the absence of § 778.114).

         The court, however, did not view this distinction as indicative of an intent to forbid the use of the FWW Method for salaried employees. Instead, the court concluded that "the most reasonable explanation as to why the [S]ecretary did not promulgate a regulation governing salaried employees is that there was not sufficient support for a regulation answering, one way or the other, the question of whether an employer may use the fluctuating workweek for salaried employees." Tr. Ct. Op. at 18.

         The trial court next attempted to ascertain whether the General Assembly's purpose in enacting the relevant portion of the PMWA "is best furthered by permitting employers to use the fluctuating workweek to calculate overtime pay for salaried employees or by barring the use of this method." Id. The court opined that "[t]he purpose of the portion of a minimum wage act requiring overtime pay is to increase employment, reduce overtime, and adequately compensate employees who must work more than a standard forty-hour workweek." Id. It further reasoned that the method for achieving these goals was to require "extra pay for overtime work such that employers will hire new employees in lieu of requiring existing employees to work overtime," citing inter alia the Supreme Court's decision in Missel, 316 U.S. at 577-78. Id. at 19. The court then concluded that the presumed goals were furthered by barring the use of the FWW Method because the FWW Method "provides very little financial incentive to expand the workforce rather than pay substantial hours of overtime to existing employees at lower rates per hour." Id.

         The trial court subsequently granted Plaintiffs' motion for class certification. On September 6, 2016, the trial court entered judgment in favor of the Plaintiffs, in the amount of $1, 378.494.77, representing the unpaid overtime, in addition to $362, 286.08 in interest to date, with costs and attorneys' fees to be calculated later. The trial court also granted an award of attorney fees in the amount of $360, 000 and $8, 000 in costs on December 29, 2016.

         III. Superior Court Decision

         GNC appealed to the Superior Court from the trial court's order of September 6, 2016, entering final judgment, and the order of December 29, 2016, granting attorney fees and costs. After oral argument, the Superior Court sought the Pennsylvania Department of Labor and Industry's views on "whether the PMWA authorizes an employer to use the [FWW] method to calculate overtime compensation for salaried employees." Chevalier v. General Nutrition Centers, Inc., 177 A.3d 280, 287 (Pa. Super. 2017) (quoting Super. Ct. Order, 9/22/17, at 2). The Department declined the invitation, asserting that the question "implicate[d] not merely an interpretation of law but policy choices among competing positions as to how best to effectuate the intent of the legislature." Chevalier, 177 A.3d at 289.

         Judge Moulton authored the lead opinion which garnered a majority for its holdings, although with different constellations of the three-judge panel joining the separate holdings. Id. at 303. First, as joined by Judge Solano and detailed more fully below, Judge Moulton reversed the trial court in part and held that GNC's application of the first half of the FWW Method, which uses the actual hours worked to calculate the regular rate, did not violate the PMWA.[11] However, in a second holding, the majority affirmed the trial court's reasoning regarding the second half of the FWW Method, holding that the use of the 0.5 Multiplier violated the PMWA and its accompanying regulations. Id. As a result of the reversal in part, the panel also vacated the order granting attorneys' fees and costs and remanded for further proceedings. Id.

         In addressing the first issue, the court considered the language and history of the PMWA and the Pennsylvania Regulations as well as the reasoning of the federal courts in Verderame, Foster, and Cerutti, in regard to the calculation of the regular rate. The court recognized that the term "regular rate" was not defined in either the statute or in the regulations adopted by the Secretary and that the term could be interpreted to provide for calculation based on either a "regular" forty hour week or the rate that resulted from the "regular" weekly payment based upon the hours actually worked each week. The question then became, in the absence of regulations from the Secretary, whether the silence should be interpreted to adopt or reject the federal guidance.

         In interpreting the term, the Superior Court majority observed that Pennsylvania "borrowed" the term "regular rate" directly from the FLSA and its regulations which at the time were "clearly understood" to allow employers to utilize the actual hours worked rather than forty to calculate the regular rate. Id. at 299. In reaching this conclusion, the court was guided by our caselaw providing that courts may consider federal authority when a Pennsylvania statute tracks a federal statute. Id. at 299 (citing Commonwealth v. Garrison, 386 A.2d 971, 977 n.5 (Pa. 1978)). Emphasizing that the General Assembly overtly diverged from the FLSA and its regulations in regard to several other provisions, the court found that the absence of language contrary to the use of actual hours in calculating the regular rate indicated that the General Assembly did not intend to reject the federal interpretation. It accordingly concluded that the use of the actual hours worked did not violate the PMWA and the Pennsylvania Regulations.[12]

         The Superior Court then turned to the second question regarding the trial court's adoption of the 1.5 rather than the 0.5 Multiplier for hours worked in excess of forty. The court presented the issue as raising a similar question as the first: whether the silence of the PMWA and the Pennsylvania Regulations in regard to the multiplier should be interpreted to adopt or reject the Federal Regulations' express authorization of the 0.5 Multiplier for salaried employees working fluctuating hours in 29 C.F.R. § 778.114(a).

         Ultimately, the Superior Court reached the opposite result from the first question, finding the silence of Pennsylvania's provisions as indicative of a decision to reject the federal guidance. In contrast to the first question, the court found significance in the fact that the Pennsylvania statute and regulations had specifically adopted multipliers in regard to other employee classes. In particular, the Superior Court majority focused on Pennsylvania's adoption of the 0.5 Multiplier for employees paid via day or job rates, 34 Pa. Code § 231.43(b), which mirrors Section 778.112 of the Federal Regulations, but did not adopt a comparable section applicable to salaried employees working fluctuating hours, as is present in federal Section 778.114. The court held that the absence of language adopting the 0.5 Multiplier for salaried employees indicated an intent not to adopt the federal provisions, given the incorporation of other federal calculation systems elsewhere in the Pennsylvania provisions. The court therefore concluded that GNC's use of a 0.5 Multiplier violated the PMWA and the Pennsylvania Regulations. Given that the court reversed the trial court in part, it vacated the order granting attorney fees and costs and remanded the case to the trial court for further proceedings.

         In his concurring and dissenting opinion, Judge Solano viewed the case as presenting issues that would be better addressed by the political bodies and particularly by the Secretary, who the General Assembly had authorized to promulgate regulations. He opined that the provisions should be interpreted as they would have been when Section (4)(c) of the PMWA was enacted in 1968, which would allow for the FWW Method of calculation as provided in Missel and adopted in Section 778.114 of the Federal Regulations. As such, he agreed with the majority that GNC may use actual hours worked to calculate the regular rate.

         He parted with the majority because, employing the same analysis, he would have additionally applied the second half of the FWW Method as adopted in the federal system utilizing the 0.5 Multiplier rather than the 1.5 Multiplier. Judge Solano faulted the lead opinion for essentially concluding that "one and one-half times the regular rate" "means that the total hourly compensation paid for the overtime hours must be 1 ½ times higher than the employee's regular rate, rather than an amount that is equal to 1 ½ times the regular rate." Chevalier, 177 A.3d at 305 (Solano J., concurring and dissenting) (emphasis omitted). He continued that, "because the Secretary promulgated no regulations that departed from that [federally approved FWW Method, ] there was no need for another regulation reiterating the existing default rule." Chevalier, 177 A.3d 308.

         Judge Musmanno drafted a brief concurring and dissenting statement adopting the trial court's opinion in full. Thus, he dissented from the majority's holding allowing the use of actual hours to calculate the regular rate but joined its application of the 1.5 multiplier for salaried employees working fluctuating hours.

         IV. Parties' Arguments

         GNC appealed the Superior Court's decision to the extent it rejected the application of the FWW Method to salaried employees working fluctuating hours.[13] Before this Court, GNC reiterates its contention that the PMWA should be interpreted consistently with the Federal Regulations, which explicitly adopt the FWW Method, 29 C.F.R. § 778.114. It argues that Pennsylvania's "silence on this issue should be interpreted as acceptance of the FWW Method, rather than a repudiation of it." GNC Brief at 14.

         GNC begins its argument by addressing the first half of the FWW Method, which was accepted by Superior Court and is not challenged by Plaintiffs before this Court, whereby the regular rate is calculated using the employee's "actual hours worked" rather than being based on forty hours. GNC emphasizes that this holding is consistent with the long-standing interpretation of the FLSA as providing flexibility to employers and employees to utilize different compensations arrangements so long as those arrangements comply with minimum wage requirements. These arrangements include compensation "by the hour, by piecework, by the week, month, or year, and with or without a guarantee that earnings for a period of time shall be a stated sum." GNC Brief at 16 (quoting Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 460-61 (1948)).

         GNC reiterates the United States Supreme Court's holding in Missel that, regardless of the compensation arrangement, the regular rate is determined based on the same simple mathematical formula: "wages divided by hours equals regular rate." Id. at 17 (quoting Missel, 316 U.S. at 580 n.16). Applying this formula to salaried employees working fluctuating hours simply requires total wages (in this case, salary and commission) to be divided by the actual hours worked in the week to calculate the "regular rate." As noted, GNC emphasizes that Plaintiffs have conceded this application.

         GNC contends, however, that Plaintiffs' concession to the first half of the FWW Method is logically incompatible with a rejection of the second half of that Method. It notes that, by mathematical principal, if the regular rate is calculated by dividing the salary by the actual hours worked, then the salary must be deemed to have compensated the employee for those actual hours at "one times" the regular rate. GNC Reply Brief at 7-8. Accordingly, GNC asserts that the employer need only pay an additional "one-half" times the regular rate for all hours over forty to meet the requirement of "one and one half times the regular rate." GNC Brief at 19-20.

         GNC additionally asserts that the FWW Method should be deemed applicable to the PMWA, given the substantial similarity of the PMWA and the FLSA. GNC recognizes that the only difference between the state and federal "regular rate" provisions requiring overtime compensation of "not less than one and one-half times the regular rate" is that the PMWA additionally provides for the Secretary to promulgate regulations. GNC Brief at 24-25 (quoting 29 U.S.C. § 207(a)(1); 43 P.S. § 333.104(c)). It further emphasizes that the Secretary later promulgated a regulation reiterating this language. 34 Pa. Code. § 231.31.

         It notes that at the time of the PMWA's adoption of the "regular rate" language, the FLSA had long been interpreted to allow for application of the FWW method to salaried employees working fluctuating hours pursuant to Missel. GNC Brief at 29. Thus, it argues that "the terms 'regular rate' and 'one and one-half times the regular rate' had each acquired a 'peculiar and appropriate meaning' in light of that jurisprudence, to permit the FWW method, and they should be construed according to that meaning." GNC Brief at 27 (quoting 1 Pa.C.S. § 1903(a)). Therefore, GNC argues that PMWA should be interpreted consistently with federal law, absent a clear indication that the General Assembly intended to diverge from the federal provisions.[14]

         GNC also rejected the Superior Court majority's focus on the absence of a specific Pennsylvania provision mirroring federal Section 778.114, adopting the FWW Method for salaried employees with fluctuating hours. GNC contends that the Federal Regulations include a non-exhaustive selection of applications of overtime to different compensation arrangements. It emphasizes that the Pennsylvania Regulations did not incorporate most of these provisions. Indeed, GNC highlights that while Pennsylvania adopted the federal provision applying the 0.5 Multiplier to day and job rates in 34 Pa. Code § 231.43(b), it did not adopt federal guidance on several significant compensation categories such as hourly rates, commission, and bonuses. 29 C.F.R. §§ 778.110, .117-.120, and .209 (respectively). It argues that "[t]he absence of regulations dealing with these common compensation arrangements surely does not mean that they were all rendered unlawful in 1977 by the adoption of the day [and job] rate regulation, or that employers could no longer look to the FLSA for guidance." GNC Brief at 40.

         GNC also responds to the distinction between the "extra one-half time" utilized for purposes of the day and job rate compensation, 34 Pa. Code § 231.43(b), in contrast to the general provision of "one and one-half times" the regular rate. It reasons that the use of "extra" is a distinction without a difference, arguing that "[w]hile the regulation describing a 0.5 multiplier includes the word 'extra' to describe the additional amount needed to bring the overtime rate to one and one-half times the regular rate, the regulations describing a 1.5 multiplier do not include the word 'extra' because they are describing the total amount owed for the overtime hours, not the extra amount owed." GNC Brief at 30-31. In contrast, it views Plaintiffs' and the Superior Court majority's construction as providing for a total payment of two and one-half times the regular rate for all except those who are paid on a day or job rate basis.[15]

         GNC also criticizes the trial court and Judge Musmanno's concurring and dissenting statement in the Superior Court for applying public policy to decide whether the FWW Method should be permitted. It avers that the General Assembly, rather than the courts, is the proper venue for deciding whether the FWW Method violates public policy. Moreover, GNC asserts that "it would be fundamentally unfair for the courts to impose substantial retroactive liability on GNC for using a pay practice that had been recognized as lawful since 1942 and that is not prohibited by any Pennsylvania statute or regulation." GNC Reply Brief at 3.[16], [17]

         In response, as noted by GNC, Plaintiffs concede that the regular rate is calculated by dividing the weekly salary by the actual hours worked. Pls.' Brief at 1-2. They nevertheless continue to argue that overtime hours should be compensated using the 1.5 Multiplier based upon the statutory and regulatory provisions.

         In so doing, Plaintiffs reject GNC's argument that the PMWA is a mirror image of the FLSA and the related argument that acceptance of the FWW Method in the federal statutes and regulations should be imported into the state provisions. They contrast the histories of the federal and state schemes in regard to salaried employees working fluctuating hours. Plaintiffs argue that the Federal Regulations derived from United States Supreme Court's post-World War I decisions, which they view as an attempt by the Court "to harmonize the new [FLSA] statute with [the] long-established doctrine of 'freedom of contract.'" Pls.' Brief at 13. They observe that the High Court approved two overtime compensation methods for salaried workers with fluctuating wages, which allowed for freedom of contract in devising different compensation arrangements in Missel and Walling v. A. H. Belo Corp., 316 U.S. 624 (U.S. 1942), [18] which was filed on the same day as Missel. They note that the Missel decision utilizing the FWW Method was incorporated into 29 C.F.R. § 778.114(a), while the Belo contract was adopted in 29 U.S.C. § 207(f) as well as 29 C.F.R. 778.402.

         In contrast to what they view as federal integration of the FLSA and the freedom to contract, Plaintiffs assert that the PMWA preamble rejects the "freedom to contract" premise. Pls.' Brief at 17. The preamble states that employees are not "on a level of equality and bargaining with their employers in regard to minimum fair wage standards" and continues that "'freedom of contract' as applied to [employees'] relations with their employers is illusory." 43 P.S. § 333.101. They highlight that the FLSA has been deemed to act as a floor for minimum wage and overtime compensation while the PMWA has been recognized as providing greater protection for employees. Pls.' Brief at 20 (citing Bayada Nurses, Inc. v. Commonwealth of Pennsylvania Department of Labor & Industry, 8 A.3d 866 (Pa. 2010)).

         Plaintiffs emphasize that, unlike the FLSA, the PMWA authorizes the Secretary to promulgate regulations addressing overtime compensation, citing 43 P.S. §§ 333.104(c) and 333.109. They view this distinction as indicative of a need for affirmative action by the Secretary rather than allowing for adoption of the FLSA provisions by implication. Plaintiffs discuss numerous variations between the federal and state provisions and identify several Federal Regulations addressing overtime calculations that were not adopted into the PMWA or the Pennsylvania Regulations, including: "different calculations of the regular rate for the regular and overtime compensation for workers on an hourly wage (§ 778.110), a piece worker (§ 778.111), salaried employees [- general] (§ 778.113), [and] fixed salary for fluctuating hours (§ 778.114)." Pls.' Brief at 39. To these specific methods, Plaintiffs assert that the Pennsylvania provisions simply provide that overtime should be compensated at "one and one-half times the regular rate."

         Plaintiffs also highlight specific state regulatory provisions as indicative of the Secretary's intent. First, they observe that 34 Pa. Code § 231.43(b), which addresses employees paid via day and job rate, mirrors 29 C.F.R. § 778.112 of the Federal Regulations and compensates employees for overtime through "extra half-time pay." 34 Pa. Code § 231.43(b). Plaintiffs observe that this is the only use of a 0.5 Multiplier in the Pennsylvania Regulations, despite appearing in several Federal Regulations. They assert that "Pennsylvania clearly exercised a choice in terms of including this particular spreading mechanism for compensation over all hours for day rates and job rates [by adopting 29 C.F.R. § 778.112] but excluding the same for salaried employees" by not adopting 29 C.F.R. § 778.114. Pls.' Brief at 41.

         Next, as discussed infra, Plaintiffs emphasize that while Pennsylvania incorporated the federal Belo provisions of 29 U.S.C. § 207(f) and 29 C.F.R. § 778.402 into 34 Pa. Code § 231.43(c), neither the General Assembly nor the Secretary incorporated the FWW Method, even though both provisions related to overtime compensation methods for employees working fluctuating work weeks. Pls.' Brief at 40-41. Plaintiffs view this as intentional differentiation by the General Assembly and Secretary in choosing which portions of the federal provisions to incorporate into Pennsylvania law.

         Plaintiffs distinguish the cases from other states cited by GNC, and point to differences in the governing statutory provisions of the relevant states. Pls.' Brief at 37-38. Plaintiffs additionally recognize that, unlike Pennsylvania, twenty-eight states have adopted the FWW Method either through specific legislation or by incorporating the FLSA in toto. Additionally, they observe that three states have rejected the FWW[19] and in twenty, including Pennsylvania, the legality of the method is unresolved. Pls.' Brief at 46 (citing the Wage and Hour Defense Institute's "State-by-State Wage And Hour Law Summary," updated 1/20/2017).

         Plaintiffs acknowledge that the "general directive to pay overtime at one and one-half times the regular rate" is ambiguous when viewed in a vacuum. Pls.' Brief at 50. They reason that the phrase should not be interpreted to allow the application of the FWW Method to salaried employees working fluctuating hours, when viewed in light of Pennsylvania's greater protection of employees and its failure to adopt the applicable Federal Regulation of Section 778.114 applying the FWW Method. It argues that "[i]f the Secretary wanted ...


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