A federal judge has ruled that Radio Shack owes overtime to its salaried employees even though the overtime calculation method the company uses is legal under federal law. Radio Shack uses the fluctuating workweek method to figure overtime when worker hours vary week to week.
According to a federal court ruling, however, the method violates the Pennsylvania Minimum Wage Act.
The judge illustrated the difference between the two laws by giving an example of a salaried employee earning $600 per week for 50 hours work. The fluctuating workweek model allows the employer to divide the 50 hours into $600 to reach an hourly rate of $12. The employee would then be paid an additional half-time payment ($6) for each hour over 40 worked (10) to arrive at an overtime payment of $60, and weekly pay of $660.
The judge went on to show that the PMWA requires paying the same employee $12 per hour for 50 hours worked ($600) and $18 per hour for 10 hours of OT ($180). Total: $780.
RadioShack disagreed with the ruling and may appeal it to the 3rd Circuit Court of Appeals.
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