• August 25, 2009

Life Time used a compensation plan whereby it gave a year-end bonus depending on performance of certain business units. Bonuses were issued quarterly through the year based on then-current financial performance but the company reserved the right to deduct from pay to the extent total year performance did not meet bonus criteria. (For biblical precedent, see here.)

Plaintiff, on behalf of a class, argued that this violated Minnesota’s Fair Labor Standards Act (MFLSA) and its Payment of Wages Act (PWA). (As to how the two statutes work together, the Court quoted: “While the MFLSA addresses minimum wage and hour standards, the PWA addresses how often wages must be paid and establishes penalties for wages that are paid late. . . . Thus, together, these acts provide a comprehensive statutory scheme for wages and payment in Minnesota and should be interpreted in light of each other.”)

Plaintiffs argued that class members were not exempt from the MFLSA because the deductions contemplated by, and actually made under, Life Time’s bonus plans supposedly precluded a finding that plaintiffs were paid a salary. Diverging from federal FLSA law, the Court of Appeals concluded that Life Time’s bonus plan did not remove the employees from the MFLSA exemption.

Thus the Minnesota Court of Appeals reversed denial of Life Time’s motion for summary judgment and ordered on remand that judgment for Life Time be entered.

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