Labor & Employment Law Daily Wrap Up, WAGE-HOUR—CLASS ACTIONS—7th Cir.: Employer properly calculated technician’s overtime pay, excluded holiday premiums from regular rate, (Jul 28, 2026)

By Jason Albright, J.D.

“Froedtert pays its hourly employees using different approaches, depending on when the employee works.”

Froedtert Health was entitled to summary judgment against class and collective claims brought by a Sterile Processing Technician who alleged that the employer failed to pay her overtime due under the FLSA and improperly excluded her holiday premiums from its regular rate calculations under Wisconsin law, the Seventh Circuit affirmed. She argued that overtime should be calculated by isolating the total amount earned during the first 40 hours worked during a week (including shift differentials and weekend bonuses) and then adding 1.5 times the regular rate for each overtime hour worked, but the employer properly calculated the regular rate by dividing the total remuneration paid in a workweek by the total number of hours, then multiplied the overtime hours by 0.5 the regular rate to calculate the overtime premium. Holiday premiums, for their part, are statutorily excluded from regular rate calculations under 29 U.S.C. § 207(e), and Wisconsin courts interpret the state’s wage and hour laws in a manner consistent with the FLSA (Lutz v. Froedtert Health, Inc., No. 25-2802 (7th Cir. July 27, 2026)).

Froedtert’s pay scheme. The plaintiff worked as a Sterile Processing Technician for Froedtert Health. Froedtert pays its hourly employees using different approaches, depending on when the employee works. Employees receive an increase in hourly pay—known as a shift differential—if the majority of the hours in the shift occur during the second shift (which starts at 3 p.m.) or after the third shift (which starts at 11 p.m.). If they work on weekends, they receive weekend differential pay for those hours. If employees work additional hours or pick up extra shifts, they qualify for Froedtert’s “Extra Pay” program, with increased pay rates for those hours. Finally, employees earn bonuses for the hours they are on call.

Regular rate. When Froedtert calculates an employee’s regular rate of pay, it incorporates three of these increases—the Extra Pay increases, shift differentials, and weekend differentials. It does not, however, include holiday pay premiums. To calculate the regular rate of pay, it divides the total weekly compensation (including shift and weekend differentials and Extra Pay, but not on call pay or holiday pay) by the total number of hours worked during the week.

Overtime calculation. Froedtert then calculates an overtime premium. To do so, it multiplies half the regular rate by the number of hours worked over 40. Overtime compensation is then added to total weekly compensation.

Example. By way of example, the court noted: “take an employee earning a base (or straight-time) rate of $20 an hour with a $2 shift differential. If that employee works 50 hours total—30 at the base rate and 20 at the shift-differentiated rate—he would earn $600 ($20 multi-plied by 30) for his straight-time hours and $440 ($22 multi-plied by 20) for his shift differential hours. After dividing his total regular rate compensation ($1,040) by the hours worked (50), he would earn a regular rate of $20.80. Under Froedtert’s method, the employee would receive an additional overtime premium of $104 (one-half of $20.80 multiplied by the 10 over-time hours). This results in a total compensation of $1,144.”

Class action. The class action, the Seventh Circuit observed, arises from a two-part dispute. The first concerns the overtime compensation methodology, and the second considers whether Froedtert’s holiday pay calculation complied with federal and Wisconsin law. The named plaintiff and other claimants argued that Froedtert improperly credited regular-rate compensation toward overtime premiums and improperly excluded holiday pay from regular rate calculations as well.

Certification and summary judgment for employer. After certifying a class, the district court granted summary judgment for Froedtert on class-wide claims related to overtime compensation and holiday pay. It concluded that the FLSA authorizes the type of “crediting” the named plaintiff alleges exists in Froedtert’s overtime rate calculations. The court also found that the FLSA statutorily excludes the holiday pay in question from regular rate calculations under 29 U.S.C. § 207(e)(6).

Motion for reconsideration, dismissal with prejudice, and appeal. The named plaintiff then moved for reconsideration, arguing the court erred as to her overtime and holiday pay claims. The district court denied her motion, concluding that its decision relied on a logical interpretation of the FLSA and was consistent with controlling precedent. In response, she filed a stipulated motion for leave to file a third amended complaint. The district court then granted her motion but dismissed her entire action with prejudice because the court had granted summary judgment to Froedtert on the claims advanced in the third amended complaint. She timely appealed to the Seventh Circuit.

The FLSA. Under the FLSA, the appeals court initially observed, an employee must receive overtime pay at “one and one-half times the regular rate at which he is employed” for any hours worked beyond the 40-hour workweek. 29 U.S.C. § 207(a)(1). The regular rate “include[s] all remuneration for employment paid to, or on behalf of, the employee[.]” 29 U.S.C. § 207(e). However, certain payments are excluded from calculating the regular rate for overtime compensation. Id. (e)(1)—(7); 29 C.F.R. § 778.108. To calculate the regular rate, the employee’s total remuneration, except such statutory exclusions, in any workweek is divided by the total number of hours worked during that workweek. 29 C.F.R. § 778.109. Any bonuses that are not statutorily excluded under Section 207(e) are included in the regular rate. Shift differentials, like those at issue in this case, are included among these bonuses or premiums. 29 C.F.R. § 778.207(b).

DOL guidance on shift differentials. The U.S. Department of Labor (DOL) provides additional guidance on calculating pay for employees receiving shift differentials. See DOL Fact Sheet #56C: Bonuses under the Fair Labor Stand-ards Act (FLSA) (December 2019). First, the total number of hours is multiplied by the base rate. Then, the shift differential hours are multiplied by the shift differential. Those two amounts are added to any additional bonuses and premiums (minus any statutory exclusions), and that sum is divided by the total number of hours worked. That sets the regular rate for the workweek.

Froedtert, in turn, asserted that its methodology is consistent with the DOL guidance.

Plaintiff’s proposed methodology. A different methodology was proposed by the named plaintiff. She argued that overtime should be calculated by isolating the total amount earned during the first 40 (non-overtime) hours worked during a week (including shift differentials and weekend bonuses) and then adding 1.5 times the regular rate for each overtime hour worked. She did not state how much pay she would be entitled to under her method. Rather, she criticized Froedtert’s methodology as “assum[ing she] already received the regular rate for each overtime hour worked.” According to her, Froedtert’s approach did not check whether premiums are included in the remuneration that is used in the regular rate calculation.

Compliant with Section 207. The Seventh Circuit found that Froedtert’s two-step overtime calculations complied with 29 U.S.C. § 207. First, Froedtert calculated the regular rate by dividing the total remuneration paid in a workweek by the total number of hours. Then, it multiplied the overtime hours by 0.5 the regular rate to calculate the overtime premium. This methodology, the Seventh Circuit found, is well within Section 207’s requirements for overtime pay to be at least 1.5 times regular pay.

Problems with her position. And there were problems with the named plaintiff’s suggestion to segregate non-overtime hours from overtime hours in regular rate calculation, noted the appeals court. Her methodology would include shift differential pay only if the hours were within the first 40 of the workweek, and this would create discrepancies between employees who worked shift differential hours during their overtime periods and those who worked the same number of shift differential hours during non-overtime periods.

Holiday pay under FLSA... Next, the court found that Froedtert properly excluded holiday pay when determining the named plaintiff’s regular rate of pay under the FLSA. Regular rate calculations include all remuneration for the workweek except for amounts statutorily excluded by Section 207(e). Holiday premiums are one of these exceptions, if they are paid at a rate one and one-half times the bona fide rate “for like work performed in nonovertime hours on other days[.]” 29 U.S.C. § 207(e)(6).

…and under Wisconsin law. The Seventh Circuit observed that Wisconsin courts interpret the state’s wage and hour laws in a manner consistent with the FLSA and other applicable federal laws. In addition, “a plain reading of ‘regular rate[]’ under Wis. Stat. § 103.02 further buttresses the exclusion of holiday premiums from regular rate calculations.”

No point in certifying question. Finally, the federal appeals court found “little, if any, reason to ask the Wisconsin Supreme Court to accept a certified question here,” despite the named plaintiff’s request otherwise. “There is no genuine uncertainty or serious doubt that the Wisconsin Supreme Court would interpret Wisconsin wage laws inconsistently with the FLSA by excluding holiday pay from regular rate calculations.”

The case is No. 25-2802.

Judge: Brennan, M.

Attorneys: Yingtao Ho (Previant Law Firm) for Nichole Lutz. Keith E. Kopplin (Ogletree Deakins) for Froedtert Health, Inc.

Companies: Froedtert Health, Inc.

Cases: WageHour ClassActions Overtime Procedure StateLawClaims IllinoisNews IndianaNews WisconsinNews