town about one case and that decision this court concluded that an employer may not use the fluctuating workweek method of overtime calculation that means that the employer may not spread an employee's salary over all hours worked unless among other things the employee receives a fixed amount for his non overtime or straight time pay you are but you're saying your are you  here is a fixed minimum there is a base wage it is fixed nobody disputes that but what brian said was to decide whether this straight time compensation is fixed what the court should look at is what has nothing to do with how many hours you work you just get a ten dollar bonus for having worked a night shift that week and the court said that because that shift differential pay is included in the regular rate because it is compensation for non overtime hours it has to necessarily cause the base essentially salary in o'brien to vary it's no longer a fixed amount for straight time the commissions issue in this case was eight dollars and additional excuse me if you work more than eight hours in any day because that's that's different than the commission circumstances because that's are different in the sense that then it's different pay for different hours as opposed to just teaching you not to pay for the same hours and let me explain why that's it is just so well focused on that there was compensation in o'brien additional compensation for any day in which you work more than eight hours and it doesn't matter whether you still work under forty hours in the course of the court's analysis there was was also to say that there the non premium portion of that pay had to be included in the regular rate and so that cour analysis o'brian and the conclusion that that pay which which did very end essence by the number of hours at least that day the course conclusion that that pay also caused the error of the suit because the straight time compensation a very w and into eighty nine is where it says the office was weekly straight time compensation also there it depending on the number of hours where and it did and it did and i and i got accepting are you endo that that we can distinguish it on that round the analysis was dependent upon the fact that a portion was included in the regular rate if i may  i think i don't think your hearing is that the breach may not have convinced the court at least yet who knows and i don't think myself that o'bryant controls here so if that's true you're probably better off spending your time on why even if additional pay for over eight hours work the court said that the regulations explain how to treat this mid workweek contractual overtime payments are the act only the premium portion of the contractual overtime rate that is the amount in excess of the employee's work at the rate made which i've just a spouse does the correct analysis the the fluctuating work week method is a departure from the the presumption that the maximum work which there are forty hours essentially is what and employee that is correct if the kicker is a kicker that is included in the non overtime compensation so there could be premium paid that would be excluded under section two zero seven of the f s a that would not be on overtime compensation so that would not cause the non overtime or sion of the paid vary but our position is that yes any any compensation that it's on top of a base wage that causes the non overtime compensation to very inconsistent with more people how do you square that with the regulations and by the way  that address commissions specifically but i think what's important to look at is that when the oh and we don't mind if you else roll per se but but the federal register which we have in our in our agenda talks about the policy implications and the court looks to these to deal well look two cases post o'brian like the a diva case and others that involved offshore pay and other types of pay where you got some sort of bonus on top of your on top of your base salary and of course said that that's inconsistent with  years on your heels you get a huge percentage that percentage is the only thing that varies is the amount of the kicker and why does that satisfy the regulations and there's no assumption about it and this is the challenge this is what the missile case said that the early supreme court case said is how do we reduce something to an hourly rate how we were and how do we reduce something to a regular rate upon which time a half will be paid for every hour or forty what the fluctuating workweek method allows an employer to do when the requirements are met is to treat the salary as being the non overtime pay for every hour that he or she works in other words it's the time in time and a half so it's the time for hours one for forty it's also the time has been satisfied by the salary but to get there you have to conclude that the salary has already compensated the employee at it's at a sort of hourly rate for each hour over forty and that's not the presumption because that you've got a forty hour maximum week so if you're an hourly employee by way of example if you make ten dollars an hour we know you're going to get those ten dollars an every hour you work including the ones over forty but the fluctuating work week does is say that the salary will also be that hourly rate for those forty that does not vary with the number of hours worked during the week that seems to suggest that when they're talking about fixed salary they're talking about fixed in relationship to the number of hours in in here it would seem that the salary the number of hours you then have a commission that is entirely independent of the number of hours and then we have in the regs i believe the statement that the precise examples in the regs are simply examples the shift differential pay they not vary with the number of hours so if the court looks at this court's decision in o'brien and look at the shift differential pay there's no variation of the number of hours that you it doesn't matter how many hours of pay in the cases that fall riot in which the department of labor and its in its final rule stated are getting it right offshore pay doesn't vary with the number of hours you're simply paid at a premium because you happen to be working on a ship rather than on shore so that's the first part of my answer the second part is i would submit that under the under the right of tory scheme the f l s a treats commissions as payments for hours worked in other words when you earn commissions you you are varying the pay with hours because you cannot make a sale i don't recall is that a legal observation or factual observation other words are you saying that the default presumption is commissions must be understood to be for hours whether they are in fact or not and then if they want to disprove that they could  a legal presumption i will say your honor i do recall saying to the district judge that you're not making the sale if you're not working so i think in that way the organ was made and i think the answer is yes that the reason that commissions are included in the regular rate which they must be under the law is because they're to find out if a second one one seven seven seven honor is that you haven't told me what you're going to pay me or our and and so the and so that in order for an employee to have an understanding of what his pay is going to be in an hourly context you know i'm going to get ten dollars only comes to the rate that your hourly rate because under missile and then under one four and under o'brian the requirement is that you receive a fixed amount for straight time pay and straight time pay is all non over time compensation straight not since it may or may not be just as a prophylactic matter we're going to disallow and runs at by having them on then even though it's not a perfect fit in every instance any extra kind of pay some will track hours like the extra hour pay o'brien some might not differential pay offs or pay this kind of pay but we're just not going to get into that because that if you that this will benefit employees to say let's stop the gamesmanship if you're going to pay a salary plus commissions and salary based on forty hour work week if you want to pay using the fluctuating work week i think that's it they know exactly what they're going to get paid every single solitary week they don't have to worry about whether commissions are going to make the difference i think that's much fair does that mean that in this case there's but this is not plan that there was not a mutual agreement and that aspect of reg wasn't satisfied we don't plea thing about the way the cases are played is it's not mentioned you attack one prong you don't discuss the mutual agreement wrong but it seems like the premise of what you're saying now is that there was no mutual agreement which i get that but i don't know what we're supposed to pretty low i mean if the employer has made has said this is how we do it then there's an agreement and so you know we haven't challenge the fact that gnc has said this is how we do it i don't think that changes the fact however that the question is still whether an think that what they may greets who is what one in four sets forth that's not what they were going to but we don't challenge that if we're wrong about about the fixed salary requirement that that d n c has as disclosed at this is how they provides that an employer must pay an employee at a rate of one and one half times his or her regular rate for all hours work in excess of forty per week do you claim this is a fixed salary that you play yes upon the number of hours worked per week is commonly referred to as a salary that the semantics doesn't really matter for purposes of the outcome of this case what matters is that mr valley please in this complain that he was a a fixed weekly amount as compensation for all hours of work and because of the policy arguments of course those are better left for congress than for this court with respect to with respect to the agency though the agency might be a pretty good place to look for the policy or does the agency treat offshore pay regardless of whether that officer pay varies with the hours no in two thousand and eight the department of labor promulgated or issued proposed regulations and the stated purpose of the proposed regular opposed amendment to section one fourteen out regulation to clarify it long standing here that any additional compensation on top of the fixed salary could be compatible and consistent with section one fourteen because after all the only rule that applies to any compensation scheme is wages divided by hours and so when the arrangement is to pay a fix plus other things as long as all those other things are properly included in the overtime calculation that's fine and so in two thousand and eight the department of labor proposed an amendment to one fourteenth to clarify not to change but to clarify that one fourteen allowed for such types of additional pay whether they be instead of bonuses or shift differentials or hours base just didn't matter and in that statement the part of labor explained that why wouldn't it be that way why wouldn't we want to encourage employers who pay a fixed policy so what is the policy of you now do they treat offshore pay and this is something that kicks you out of the room in the in the preamble to so in two thousand and eleven the after the change of administration the department of labor announced that it would not be making the proposed changes it did make some material does that mean as of today deal well treat offshore pay as within the rules or not as of today the department of labor would say that ours based pay hours based additional compensation is not wills case out of the southern district of new york basically since o'brien the courts the district courts have aligned in two ways all of which are reconcilable there were some courts involving offshore pay seek a holiday pay and day hours of work because when they happened to work a certain hour in a certain place or at a certain time that hour was automatically paid more and so as it o'bryant those courts health this was not a salary it was not a fixed them it was in fact  difference that matters with respect to commission because i can understand the argument that at the very number of hours varies which is what o'brien focuses on right in discussing it but i'm having trouble understanding why just because we s that the number of hours don't vary but we like some hours more than other hours why is that a point that matters for purposes of determining whether the rule applies and on well to be clear any number of hours and sell nothing and pay no additional they could work one minute and sell a ton of products and make a lot of commissions the key language and the o'brien case what if cited in describe one fourteen problem in the o'brien case there was there were payments based upon the number of hours worked and this debate you use it's only that then because it but you see deal well doesn't seem to follow that rule because offshore pay does not vary with number of hours it varies with type of hours but it can vary with number of hours and it doesn't have to it doesn't have and they don't care whether does or not because they count all of it as kicking you out of the rule which is why there should be no distinction between any of these types of  and that's a reason for saying that under the n f l s a you might win even if the rule doesn't apply right ok so one possibility is that the district were never passed on whether you win if the rule doesn't apply right this is a no if right does it or the circle doesn't matter so that was the alan case from the eleventh circuit in two thousand and seven that case involved section one fifteen which talks about an employee who was paid two different rates three different hourly rate for working two different types of job and work thirty hours in a ten dollars job and twenty hours in a twenty dollars job and how do i merge those two rates into a regular rate for purposes of complying with the rules set forth by the supreme court in one thousand forties and walling over and o understand real world effects of things would just make any difference going to employers the answer to this question when they just would they just adjust the commission amounts of something like that i guess i don't know if the court particular which i get how it could benefit an employer but if you don't need to strip terms of it i'm not sure what the relevance of it would be it's our promise or question that section one fourteen provides some sort of alternative to the basic account it seems like a necessary one it's good would be fine also any time we do simplify something which is exactly the point that the supreme court and even the earlier part of the bulletin make which is we don't care what you do employer employee with respect to your employment arrangement but once you decide it here will be the rules that apply to calculate the regular rate and overtime obligation and all of those rules are followed from the same basic rule that was announced four times by the supreme court of the ninety four years total wages for the week divided by total hours for the week is regular rate that rate is paid for all those hours naturally because you divided hours or dollars by hours and so now you only only additional premium amount to come up to your time and a half overtime compensation as my colleague mentioned the whole presumption of this is that they were already paid time for all hours work all that's left is and a half it is not true that section one fourteen sets forth some exception that allows an employer to pay less than time and a half it couldn't the statute says time and a half it doesn't provide for the department of labor to establish exceptions supposed to sweep piecework they were producing widgets the average employee produces one widget in our and you had a fixed salary of five hundred dollars and then how many hours you work plus commission fifty cents per would that be ok any other definition absolutely and that's because that's actually around the obligation by saving some of the money for some other payment like a commission payments or a bonus at the end of the year because those payments have to be built into the overtime calculation also gnc i was put in a complaint the commissions were grossed up for overtime so when employees sell the product in order to a two dollar commission on that product at the end if we just look at that two dollars in isolation gnc would divide that you dollars by the hours work of the week to come up with a regular rate attributable to that component of their compensation and however it's going to be a little different than that i will give you a piece rate and if you produce more than the minimum wage you'll get the piece rate if you produce less than the minimum wage of the review don't get up to whatever it is you get the rate of two dollars of the whatever how does that fit into this that would be lawful to going back to the supreme court precedent we do not interfere with an employer it employs right to bargain for the terms of employment but once they reach a bargain the rest of the overtime calculation is math it's a mathematical computation that employer cannot manipulate any further so in your situation if an employee created no pieces their hourly rate would be the minimum wage if they created lots of pieces their hourly rate for that week would be the piece rate value divided by the total hours wor and i understand the logic of what you're saying it does seem like there's a surprisingly large amount of precedent and time spent by the department of labor working you know in the example that is actually the role of the to work out because if you were to focus on that example the employer would win every time anyway isn't that strange it is strange doesn't that lead some light on public to employers are and how the rule of walling and override motor work in the real world so there's an example about commissions there's an example of out of bonus no one would suggest that an employee was only paid a bonus and no other compensation so you can't read each example in isolation as an example about piece rates and job rates and day rates and hourly rate at the very beginning and want to wait and why don't i and the department of labor says these are examples of how to do it and one of the examples is an employee who's paid a salary it doesn't say in that example by the way this is somehow special and it we prohibit any other form of additional compensation we can simply merge one fourteen's example about the salary with one eight hundred example about how to do commissions and push them together and the complaint please the gnc essentially did that we took all the money earned in the week divided by all of the hours worked in the week to get a regular rate and pay one half of that amount as an additional overtime premium to bring the employee up to time and a half over time based on the regular ra import of one one for this court and ryan indicated that he had previously given one for finding a fact because it is an interpretation of the supreme court's decision in missile that's entirely consistent with what the seventh circuit s of what the supreme court meant in the missile case which spoke only of a fixed amount for straight time pain and on that point i would say i think that what's important to recognize here is that for this court to rule in  it would have to conclude that o'brien was wrong when it said that a fixed minimum doesn't cut it because that's the argument and its essence is that you can have a fixed minimum and then add other stuff to it putting aside the type of the work or a loss like that o'brien clearly says a fixed minimum doesn't count because it has to be a fixed amount for the st time pay not overtime pay period and we think that that is entirely dispositive last point the wills case are and switzer all make a very big error when they look at this court's decision o'brian they try to distinguish it by saying that in all brian the additional compensation based upon how or when hours are worked violates the fixed salary requirement because it must be excluded from the regular rate to the contrary the reasoning o'brian was when it's included in the regular rate it causes non overtime compensation to vary and that's what causes a violation of the requirement of a fixed salary unless there are any other questions i create a course talk thank you