United States District Court, D. Massachusetts
For Joseph Lalli, Plaintiff: Jonathan D. Orent, LEAD ATTORNEY, Motley Rice LLC, Providence, RI; Adrian N. Roe, PRO HAC VICE, Adrian N. Roe, P.C., Pittsburgh, PA; Mathew P. Jasinski, William H. Narwold, PRO HAC VICE, Motley Rice LLC, Hartford, CT; Michael D. Simon, PRO HAC VICE, Law Office of Michael D. Simon, Monroeville, PA.
For General Nutrition Corporation, General Nutrition Centers, Inc., Defendants: Brad A. Funari, PRO HAC VICE, McGuireWoods LLP, Pittsburgh, PA; Christopher S. Feudo, Robert A. Fisher, Foley Hoag LLP, Boston, MA; Christopher M. Michalik, Tyler S. Laughinghouse, PRO HAC VICE, McGuireWoods LLP, Richmond, VA.
MEMORANDUM AND ORDER REGARDING DEFENDANTS' MOTION TO DISMISS (Dkt. No. 8)
MICHAEL A. PONSOR, United States District Judge.
This is a wage and hour case brought by Plaintiff and would-be class representative Joseph Lalli, a former store manager of Defendants, General Nutrition Centers, Inc., and General Nutrition Corp. (collectively " GNC" or " Defendants" ), challenging GNC's alleged failure to pay him time-and-a-half compensation for hours worked in excess of forty hours. Plaintiff contends that GNC's company-wide policy of using the " fluctuating work week" (" FWW" ) method to calculate overtime for non-exempt employees violated the Federal Labor Standards Act (" FLSA" ), 29 U.S.C. § 207 (a), and the Massachusetts Minimum Fair Wage Law, Mass. Gen. Laws, ch. 151, § 1A.
Defendants have moved to dismiss. At the heart of this case is a disagreement over whether a company may use the FWW pay model when it factors sales commissions into the regular weekly rate. As will be seen below, the undisputed facts make clear that Defendants correctly employed the FWW approach in calculating Plaintiff's pay rate. As a result, the court will allow Defendants' motion to dismiss.
Plaintiff is a resident of Palmer, Massachusetts. He managed a GNC store in Massachusetts from September 2010 through January 2013. At all relevant times, he was a non-exempt employee under the FLSA.
GNC sells health and wellness products including vitamins, minerals, and supplements through approximately 3,100 company-owned stores throughout the United States. There are around seventy GNC stores in Massachusetts. At these locations, GNC sold products made by GNC as well as products made by third parties.
Plaintiff received a guaranteed salary as compensation for each week worked. In addition, GNC paid its store managers commissions, over and above their regular pay, based on a percentage of GNC product sales and on sales of select third-party products. All commissions were computed and paid with the employee base pay on a bi-weekly basis. The commissions were not contingent either on store performance or on numbers of hours worked, but rather were based on the individual employee's successful efforts in selling eligible GNC and third-party products. Inevitably, these commissions would vary from week to week.
Plaintiff occasionally worked more than forty hours per week. When this happened, GNC calculated Plaintiff's overtime wages using the FWW pay model. Under this method, GNC would (1) add together both (a) the guaranteed base portion of the employee's wages for that week and (b) commissions for the workweek; (2) divide the total wages by the number of hours the employee logged for that week; and (3) pay 50% of the resulting per hour rate for any hour worked in excess of forty hours per week. Because the commission figures were included in compiling the regular hourly rate and because commissions were inherently variable, Plaintiff alleges that GNC did not pay him a " fixed amount as straight time pay." 29 C.F.R. § 778.114. As a result, he argues, it was improper for GNC to use the FWW approach in calculating his overtime.
On December 31, 2013, Plaintiff filed this two-count complaint alleging violations of the FLSA, 29 U.S.C. § 207(a), and the Massachusetts Minimum Fair Wage Law, Mass. Gen. Laws ch. 151, § 1A. Plaintiff seeks to bring this complaint individually and as a class representative for a nation-wide and state-wide class. The parties agree that Massachusetts labor law substantively mirrors its federal counterpart.
On January 31, 2014, Defendants moved to dismiss. (Dkt. No. 8.) On March 12, 2013, Plaintiff moved to certify the class. (Dkt. No. 24.) On April 4, 2014, the court allowed Defendants' motion to stay briefing on the class certification motion until it ruled on the motion to dismiss. (Dkt. No. 36.)
A. Standard of Review