Supreme Court Denies Review of "Half Time" Overtime Damages Calculation

United States Supreme CourtOn February 22, 2011, the U.S. Supreme Court declined to review a decision from the Seventh Circuit Court of Appeals which had approved the use of the “half time” method of computing unpaid overtime compensation in a misclassification case under the FLSA. Urnikis-Negro v. American Family Property Services, 616 F.3d 665 (7th Cir. 2010), cert. denied, No. 10-745 (Feb. 22, 2011).

Pursuant to the “half time” method, when an employee agrees to receive a fixed weekly salary as payment for all hours worked, the employee’s “regular rate” for any particular workweek is determined by dividing the employee’s weekly salary by the number of hours actually worked in that week. If it is later determined that the employee was misclassified as exempt, the amount of unpaid overtime compensation due for that week is equal to half of the employee’s regular rate times the number of overtime hours worked.

Plaintiffs have urged courts to reject the “half time” method in favor of the so-called “time and a half” method, which results in much larger damages awards. The “time and a half” method divides the employee’s weekly salary by a fixed number of hours (typically 40) to determine a fixed weekly regular rate. The employee is then awarded 1.5 times that rate for all hours worked each week in excess of that fixed number.

While some district courts have accepted plaintiffs’ arguments in favor of the “time and a half” method, the Supreme Court’s decision not to disrupt the Seventh Circuit’s endorsement of the “half time” method was not surprising. Four other circuit courts and the U.S. Department of Labor have approved the “half time” method, and no circuit court has taken a contrary position. See Desmond v. PNGI Charles Town Gaming, LLC, 2011 U.S. App. LEXIS 702 (4th Cir. Jan. 14, 2011); Clements v. Serco, Inc., 530 F.3d 1224 (10th Cir. 2008); Valerio v. Putnam Assocs., Inc., 173 F.3d 35 (1st Cir. 1999); Blackmon v. Brookshire Grocery Co., 835 F.2d 1135 (5th Cir. 1988); Wage and Hour Opinion Letter, FLSA 2009-3 (Jan. 14, 2009).

This entry was written by Robert W. Pritchard.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.