149 Madison Avenue Corp. v. Asselta

Background

A group of service and maintenance workers employed in a Manhattan loft building sued their employer to recover unpaid overtime, liquidated damages, and attorney's fees under the Fair Labor Standards Act. The dispute covers April 21, 1942, through December 10, 1943. Before April 20, the workers were paid under an older contract that paid a flat weekly wage for a specified workweek. A new contract, negotiated after War Labor Board involvement, set longer scheduled workweeks (46 hours for most employees and 54 for watchmen) and stated a formula that purported to include overtime pay within the weekly wage.

Reasoning

The key question was whether the contract formula actually produced the hourly "regular rate" the law requires and whether the plan gave proper overtime pay. The Court looked beyond the paper formula to how the agreement operated in practice. It found that part-time pay, treatment of excused absences, retroactive payments, and other payroll practices showed the parties effectively treated the weekly wage as a pro-rata pay for scheduled hours, not as a formula establishing the lawful hourly rate. Because the formula was not the actual regular rate, the agreement failed to provide required overtime pay. The Court affirmed the lower courts' rulings for the employees.

Real world impact

The decision lets these workers recover unpaid overtime and liquidated damages. It also warns employers that a contractual formula that does not match actual pay practices cannot be used to avoid legally required overtime payments. Employers must show a genuine hourly regular rate when claiming special wage arrangements.