In a recent decision, the Pennsylvania Superior Court complicated the already tricky business of paying nonexempt employees on an hourly basis for Pennsylvania employers. In Chevalier v. Hiller, the court found that a “fluctuating workweek” overtime calculation method, approved by federal regulation, violates Pennsylvania’s Minimum Wage Act, 43 P.S. Section 333.101 et seq. (PMWA). The Superior Court reversed the trial court’s grant of summary judgment in favor of the employees, in a comprehensive opinion that requires Pennsylvania employers to review carefully their overtime calculation methods.

The employees in this case were managers at various levels for GNC. GNC calculated their overtime pay using the “fluctuating workweek method.” Under this method, in an example provided by the Superior Court, overtime was calculated as follows: employees were paid $1,000-a-week regardless of the number of hours worked in a week. In one week, the example goes, the employee worked 50 hours. GNC thus calculated the employees “regular rate” at $20 an hour. GNC then paid the employee an additional $10 an hour for the 10 hours over 40, resulting in $1,100 in wages for the 50-hour week.