Judge Gertner of the U.S. District Court for the District of Massachusetts recently issued an opinion rejecting the Klinghoffer rule, potentially making it easier for a plaintiff to prevail on claims that his or her employer failed to pay the minimum wage. Under the Klinghoffer rule, which takes its name from the case of United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487 (2d Cir. 1980), courts apply a weekly-average method to determine whether an employer is in compliance with the minimum wage requirement of the Fair Labor Standards Act. Applying this rule, courts have declined to find a minimum wage violation as long as the total weekly average wage divided by the hours actually worked is at least equal to the applicable minimum wage. For example, assume an employee works 26 hours per week at a rate of $10 per hour, earning $260 each week. Even if this employee worked an additional four hours for which she was not paid, her average hourly wage would equal $8.67, exceeding the minimum wage.
The employer in Norceide v. Cambridge Health Alliance invoked the Klinghoffer rule in response to claims brought by current and former employees. Those employees alleged that their employer failed to compensate them for the time they worked during meal breaks and before and after shifts. The employer then sought to dismiss those claims because the total weekly average wage paid to the employees divided by the hours they actually worked equaled or exceeded the applicable minimum wage.
Judge Gertner, in a decision issued shortly before she retired from the bench, rejected the Klinghoffer rule. In reaching this conclusion, Judge Gertner stated that, when enacting the FLSA, Congress sought to protect workers and ensure that they received “a fair day’s pay for a fair day’s work.” Judge Gertner indicated that this purpose could not be served by looking at all of the hours worked during a workweek; instead, each hour must be given significance. Accordingly, the employees could seek the minimum wage for any hours for which they were not paid. If other courts follow this conclusion, employer liability for wage and hour violations will increase, since each hour an employee works unpaid could give rise to a minimum wage violation.