Opinion ID: 4169602
Heading Depth: 2
Heading Rank: 2

Heading: Miscalculation of Overtime Rate Claim

Text: Silver Care argues that the plaintiffs’ FLSA claim alleging miscalculation of the overtime rate rests upon a dispute over an implicit term of the CBA regarding whether the differentials already include a payment for overtime. Silver Care claims that during the collective bargaining process, when it negotiated to grandfather in some of the differentials, it also came to an agreement with the nurses’ union that the additional differential amounts would already include overtime.18 For example, Silver Care asserts that what appears to be a “$3.00 per hour weekend differential is a gross amount comprised of the $2.00 per hour differential and an extra $1.00 per hour in overtime premium . . . regardless of whether [the weekend shift] was worked in excess of 40 hours per week.”19 This, Silver Care posits, constitutes a dispute over an implicit term of the CBA that must first be sent to arbitration before a court can decide whether the plaintiffs have a claim under the FLSA.20 Silver Care’s argument fails because the plaintiffs’ overtime claim is governed by the FLSA. Unlike the dissent, we believe that the statute requires us to bypass how the CBA breaks down the pay differentials, and look only to whether these pay differentials fit into the statutory definition of remuneration that must be included in the calculation of an employee’s regular hourly rate of pay. 18 Appellant’s Br. at 44. 19 Id. at 41. 20 Id. at 41-42. 10 The FLSA requires qualifying employers to pay “at a rate not less than one and one-half times the regular rate” to employees for hours worked in excess of forty hours a week.21 The regular rate of pay is defined as “all remuneration for employment paid to, or on behalf of, the employee,” and the statute explicitly sets out a limited list of eight exceptions to this rule of “all remuneration.”22 We have held that these statutory exclusions are exclusive. “[A]ll remuneration for employment paid which does not fall within one of these seven exclusionary clauses must be added into the total compensation received by the employee before his regular hourly rate of pay is [to be] determined.”23 Furthermore, these statutory exclusions “are narrowly construed, and the employer bears the burden of establishing [that] an exemption [applies].”24 In other words, whether the wage differentials should be included in the regular rate of pay depends not on any labels assigned to them by the CBA, but on whether they fit into one of the statutory exclusions. An employee’s “regular rate is a readily definable mathematical calculation that is explicitly controlled by the FLSA.”25 As the Supreme Court puts it, the regular rate “is not an arbitrary label chosen by the 21 29 U.S.C. § 207(a)(1). 22 29 U.S.C. § 207(e). 23 Smiley v. E.I. Dupont De Nemours & Co., 839 F.3d 325, 330 (3d Cir. 2016) (quoting 29 C.F.R. § 778.200(c)). 24 Id. (quoting Minizza v. Stone Container Corp. Corrugated Container Div. E. Plant, 842 F.2d 1456, 1459 (3d Cir. 1988) (internal citations omitted)). 25 Id. (citing Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424-45 (1945)). 11 parties; it is an actual fact.”26 Once amount of wages actually paid is known, “the determination of the regular rate becomes a matter of mathematical computation, the result of which is unaffected by any designation of a contrary ‘regular rate’ in the wage contracts.”27 Therefore, whether the CBA designates $2.00 of the $3.00 shift premium for working on Sunday as “regular pay” and $1.00 as “overtime” is completely irrelevant to a court’s analysis of the proper overtime payment owed to the plaintiffs. A court determines the regular hourly rate of pay “by dividing [the employee’s] total remuneration for employment (except statutory exclusions) in any workweek by the total number of hours actually worked by him in that workweek for which such compensation was paid.”28 This calculation can be done simply by looking at a paystub. In conclusion, the plaintiffs’ miscalculation of overtime rate claim does not depend on any disputed term of the CBA, and, therefore, need not be sent to arbitration.