Labor & Employment Law Daily Wrap Up, WAGE-HOUR—CLASS ACTIONS—E.D. Wis.: Employer correctly calculated employees’ regular rate for overtime purposes, (Jul 25, 2025)

By Ronald Miller, J.D.

Setting aside holidays, the employer correctly calculated the employees’ regular rate by dividing each employee’s total weekly compensation—including extra pay and shift and weekend differentials—by the number of hours worked.

An employer was entitled to partial summary judgment in a wage suit brought by an employee alleging class claims for overtime violations, ruled a federal district court in Wisconsin. Here, the court determined that the employer’s calculation was consistent with guidance from the Department of Labor, as illustrated by Example B from the agency’s Fact Sheet #56C. The court interpreted the FLSA as requiring employers to pay at least one and one-half times of what amounts to a blended average. With respect to the employee’s individual claim for on-call pay, the employer did not contest liability, and thus, the employee was entitled to summary judgment as to it (Lutz v. Froedtert Health Inc., No. 23-CV-974 (E.D. Wis. July 22, 2025)).

Certified classes. The court certified two classes in an action brought by an employee. One class consisted of employees who allegedly worked over 40 hours and received overtime pay at a rate lower than time and a half the regular rate earned for the workweek. The second class consisted of employees who worked over 40 hours, and also received pay for working on a holiday, in that same workweek, that was computed at an hourly rate lower than time and a half the regular rate earned that same workweek.

Incentives. The parties agreed that employees were eligible to receive a shift differential for second or third shift if a majority of the shift occurs during second shift hours that start at 3 p.m. or if a majority of the shift occurs during third shift hours that start at 11 p.m. Employees were also eligible to receive weekend differential pay for working on weekends. The employer also operates an “Extra Pay” program which increases the normal hourly rate of pay for designated hours or shifts to incentivize certain critical employees to work additional hours or pick up extra shifts and enable operations to continue.

Regular rate. To calculate the regular rate used for overtime compensation, the employer included its employees’ shift and weekend differentials, as well as units of extra pay. The employer’s payroll system excluded all holiday pay premiums from the computation of the regular rate used for overtime purposes.

On-call claims. The employee also alleged two individual claims related to her on-call pay and meal period compensation. While working within the employer’s Sterile Processing Department, from February 2022 to April 2023, the employee wore a Vocera device, which operates like a walkie-talkie. She took her meal breaks in the employer’s public cafeteria. She often answered her Vocera during meal breaks.

Class claims. In moving for summary judgment on her two class-wide claims the employee argued that the employer: (1) improperly totaled weekly compensation when overtime was involved, and (2) improperly calculated the overtime rate when employees worked overtime during a week they also worked on a holiday. However, the employer contended that the class-wide claims failed because: (1) her challenge to the way in which overtime was calculated is contradicted by the Department of Labor (DOL) regulation on overtime (29 C.F.R. § 778.110(b)), the DOL’s Fact Sheet #56C, and the DOL’s online overtime calculator, and (2) her holiday overtime challenge is contradicted by the DOL’s regulation on “special days” (29 C.F.R. § 778.203(b)) and the DOL’s Field Operations Handbook.

Overtime calculation. Setting aside holidays, the parties agree that the employer correctly calculated the employees’ regular rate by dividing each employee’s total weekly compensation (including extra pay and shift and weekend differentials) by the number of hours worked. After determining the regular rate of pay, the employer multiplied the number of hours worked over forty by one-half the regular rate to determine the overtime premium an employee should receive in addition to the total weekly compensation earned.

Here, the court determined that the employer’s calculation is consistent with guidance from the Department of Labor, as illustrated by Example B from the agency’s Fact Sheet #56C. The statute, § 207(e)(7), explicitly defines “regular rate” to include “all remuneration for employment paid to, or on behalf of, the employee,” subject to certain enumerated exemptions that the parties agree do not apply to this claim.

Although the Seventh Circuit has not had occasion to opine on this issue, the Tenth Circuit has upheld the DOL-prescribed methodology, including the employer’s use of the one-half multiplier for each overtime hour worked, Chavez v. City of Albuquerque, 630 F.3d 1300, 1312–13 (10th Cir. 2011).

Thus, the court interpreted the FLSA as requiring employers to pay at least one and one-half times of what amounts to a blended average. Because the “regular rate” is an aggregated amount that already accounts for additional pay like shift and weekend differentials, removing that extra pay in the addition process would result in over-and under-counting of those differentials.

Holiday hours. Relying on the “special days” exemption under § 207(e)(6), the employer excluded extra compensation it paid for work on holidays when calculating the regular rate for overtime purposes. The employee argued that the extra compensation in question did not qualify for the § 207(e)(6) exemption.

To qualify for this exemption, the extra compensation must be “paid for work…on Saturdays, Sundays, holidays, or regular days of rest, or on the sixth or seventh day of the workweek, where such premium rate is not less than one and one-half times the rate established in good faith for like work performed in nonovertime hours on other days.” 29 U.S.C. § 207(e)(6). The DOL regulation distinguishes between two different categories of employees. 29 C.F.R. § 778.203(a). On the one hand, “[w]here an employee is hired on the basis of a salary for a fixed workweek or at a single hourly rate of pay, the rate paid for work on ‘special days’ must be at least time and one-half his regular hourly rate in order to qualify under section 7(e)(6).” 29 C.F.R. § 778.203(a). Alternatively, for an employee who “is a pieceworker or…works at more than one job for which different hourly or piece rates have been established,” the extra compensation will qualify for the exemption if it is “one and one-half times either (1) the bona fide rate applicable to the type of job the employee performs on the ‘special days’, or (2) the average hourly earnings in the week in question.” 29 C.F.R. § 778.203(a).

The employee contended that she and the other class members fall into the first category for employees who work at a single hourly rate of pay. But calculating the regular rate would not be necessary for first-category employees who earn a single hourly rate of pay because the relevant rate would simply be that singular rate. Because the holiday pay in question qualifies for exclusion from the regular rate calculation under § 207(e)(6), the employer is entitled to judgment as a matter of law under federal law with respect to subclass two’s claim for overtime compensation.

Individual claims. Here, the employee alleged (1) that the employer should have included on-call pay in the regular rate calculation for overtime, and (2) that all her meal breaks were compensable because she was not free to leave the premises, and even if not, that certain meal breaks were compensable because work responsibilities interrupted the breaks. The employee moved for summary judgment only with respect to the on-call pay, while the employer moved for summary judgment only with respect to the mealtime compensability.

On-call hours. The employer did not contest liability on the employee’s individual on-call pay claim. It acknowledged that payroll records reflect the employee received on-call pay during weeks that she worked more than forty hours. Because the parties have not provided further briefing on the issue of damages, the court made the limited finding that judgment as a matter of law is appropriate with respect to the employer’s liability for on-call pay during overtime weeks, subject to the employee establishing she suffered damages during the relevant period.

Meal periods. As for mealtime compensability, the FLSA and Wisconsin’s wage-and-hour law require that employees be compensated for meal periods if the employee is not completely relieved from all work duties.

Ability to leave premises. According to the employee, her manager told her that she could not leave the employer’s campus during meal periods without the manager’s permission because the employer would not have coverage for her position if she did not return. The employer countered that the conversation has no effect because that individual is no longer the employee’s manager. The fact that the “rule” that she could not leave Froedtert’s campus was communicated by a manager for a prior job in a different department rather than established by any formal policy supports the employer’s position.

Ultimately, the employee’s deposition testimony about needing permission, combined with the employer’s potentially conflicting policies, presented a genuine dispute of fact as to whether the employee could leave during her meal periods. Therefore, the employer’s motion for summary judgment was denied with respect to the employee’s individual claim under Wisconsin law that all meal periods were compensable due to an on-campus restriction.

Interruptions during meal periods. The Seventh Circuit “has adopted the predominant benefits test for determining whether meal periods are work periods.” “Under this test, a meal period is not work time if ‘the employee’s time is not spent predominantly for the benefit of the employer.’”

According to the employee, the employer did not regularly allow her thirty minutes of uninterrupted time for meal breaks. She asserted that the supervisors knew she was taking her meal break when they called because she would notify the relevant supervisor when she was beginning her meal period each day.

The parties agree that the employer automatically deducted thirty minutes for the employee’s meal periods unless she canceled a meal break on the timekeeping system or notified her supervisor that she did not take a meal break.

The court agreed that the employer’s policy communicates that employees need to alert their supervisors if no meal break is taken at all but that reasonable factfinders could disagree about whether meal periods shortened by interruptions should be treated the same way. Accordingly, a genuine dispute of material fact existed as to what the employer knew about the employee’s work during meal periods.

On this record, no reasonable factfinder could conclude that the employee spent any meal periods with her time or attention devoted primarily to work responsibilities. Accordingly, the employer was entitled to judgment as a matter of law as to the employee’s claim for mealtime compensation due to work interruptions.

The case is No. 23-CV-974.

Judge: Duffin, W.

Attorneys: Yingtao Ho (The Previant Law Firm) for Nichole Lutz. Brian M. Radloff (Ogletree, Deakins, Nash, Smoak & Stewart) for Froedtert Health Inc.

Companies: Froedtert Health Inc.

Cases: WageHour ClassActions WorkingTime Overtime RemediesDamages StateLawClaims WisconsinNews