Essay About Life Time Fitness And Corporate Bonus-Pay Plans

Amy Baden-Winterwood, Et Al . V . Life Time Fitness, Inc. Case Study
Amy Baden-Winterwood, et al . v . Life Time Fitness, Inc. Case StudyIn the case of Amy Baden-Winterwood, et al. v. Life Time Fitness, Inc., the main issue is whether or not the employees are entitled to overtime compensation. Are employees entitled to overtime pay if they work more than 40 hours per week?  According to the Fair Labor Standards Act (FLSA), “the maximum number of hours before overtime pay is required is 40 hours per work-week.” (Moran, 2014, pg. 440) The Fair Labor Standards Act regulates both the minimum compensation and the maximum number of hours an employee could be required to work before being compensated for overtime pay.BackgroundLife Time Fitness is a corporation that owns and operates sixty health and fitness centers across the United States. They are facing a lawsuit because the plaintiffs, current or former employees, claim that their method of compensating was not consistent with the salary-basis test and were not exempt from the overtime provisions of the FSLA during a pay period and they are entitled for overtime for hours that are over 40 hours per work week. Life Time Fitness, Inc. states that the plaintiffs are not entitled to overtime for any pay period during their employment. The plaintiffs believe that the language in corporate bonus-pay plans that covered them during the time of their employment with Life Time Fitness was inconsistent with the salary-basis test. (Moran, 2014, 451) The salary-basis test states that an employee will be considered to be paid on a “salary basis” if the employee regularly receives each pay period on a weekly, or less frequent basis. The predetermined amount constituting all or part of the employee’s compensation, which is ot subject to reductions because of variations in the quality or quantity of the work performed. (Moran, 2014, 451)         During the period that each Plaintiff was covered by corporate bonus-pay plan, he or she was generally paid a pre-determined amount of compensation, which is also known as base salary to Life Time Fitness, on a semi-monthly basis. Each Plaintiff was also eligible to receive monthly bonus payments based on their performance. During the dates in November and December of 2005, there were eight Plaintiffs who had their base salary reduced to recover the amounts of unearned bonus overpayment they received prior to those dates. However, it wasn’t until January 1, 2006 that Life Time Fitness altered their corporate bonus-pay plan to implement the 20% hold back that was designed to protect the corporation from overpayments and they also revised the 2004-2005 corporate bonus-pay plans. Life Time Fitness claimed that the Plaintiffs were exempt from the FLSA’s overtime provisions under the “bona fide executive, administrative, or professional capacity” exemption. The issue is whether the Plaintiffs’ compensation plans satisfy the salary-basis test. In August 2004, the DOL updated the regulations for the salary-basis test. (Moran, 2014, pg. 252)