In a decision that could lead to significant litigation cost savings for
employers, the U.S. Court of Appeals for the 10th Circuit endorsed the
fluctuating workweek method of calculating back pay awards for
misclassified salaried employees in lawsuits arising under the Fair Labor
Standards Act. In Clements v. Serco, Inc., 2008 U.S. App. LEXIS
13806 (10th Cir. July 1, 2008), the 10th Circuit held that the district
court properly used the fluctuating workweek method to calculate a back
pay award for unpaid overtime, rather than the alternative time-and-a-half
formula, because the parties had a "clear mutual understanding"
that the plaintiffs would be paid a fixed salary regardless of the number
of hours they worked each workweek. In addition, the court joined the 1st
and 4th Circuit Courts of Appeals in rejecting the proposition that the
fluctuating workweek method applies only where the parties also had a
"clear mutual understanding" as to how overtime pay would be
calculated.
