Fifth Circuit Finds Fluctuating Workweek Correct Method for Calculating Damages in FLSA Misclassification Case

On August 16, 2013, the U.S. Court of Appeals for the Fifth Circuit reaffirmed the use of the “fluctuating workweek” method for calculating damages of workers owed overtime pay as a result of misclassification as “exempt” under the FLSA. In Ransom v. M. Patel Enterprises, Inc., the trial court found executive managers of Party City retail stores were misclassified as exempt from the overtime provisions of the Fair Labor Standards Act (FLSA) when the company paid them flat weekly salaries regardless of the hours they worked. On appeal to the Fifth Circuit, the company did not contest the workers’ status under the FLSA, but argued the lower court improperly calculated overtime damages.