Norwegian Cruise Line Settles Salespeople’s Overtime Case

NCL Corp. Ltd., a subsidiary of Norwegian Cruise Lines, will pay to settle a lawsuit by salespeople who said the company incorrectly factored in sales commissions when calculating overtime pay, according to a settlement that received final court approval.

The settlement ends a lawsuit that had been won by the employer before the U.S. Court of Appeals for the Eleventh Circuit reversed its win, as well as a second collective action that was filed by a separate group of salespeople with nearly identical claims. A collective action is a method for litigating a case with multiple plaintiffs under the Fair Labor Standards Act that’s similar to a class action.

The Eleventh Circuit’s decision resolved a disagreement among federal trial courts in the Sunshine State that have reached different conclusions on how to apply an FLSA rule regarding overtime eligibility for employees who earn income through commissions. The Eleventh Circuit establishes precedent for federal courts in Florida, Alabama, and Georgia.

A class of 58 salespeople will share a $65,250 fund. The company agreed to pay an additional $300,00 to cover attorney’s fees and $5,480 for litigation costs.

Company Won Before Losing Appeal

When it reversed the employer’s win, the Eleventh Circuit ruled in April 2017 that a lower court applied an incorrect standard for calculating overtime.

Commissions should have been factored in to determine overtime eligibility on a month-by-month basis because that’s how the company paid them out, the appeals court held. It reversed a determination by the lower court that compensation should be calculated as an average amount per week across the entire period a salesperson worked for the company.

The Eleventh Circuit ruling put it at odds with one in which the Seventh Circuit found that averaging earnings over a long time period was an acceptable method for determining an employee’s income. A split among circuit courts means the issue eventually could be reviewed by the U.S. Supreme Court, which may want to rule so it can establish a nationwide standard.

The case is Crankshaw v. NCL Corp., 2018 BL 89542, S.D. Fla., No. 16-cv-20415, final settlement approval 3/14/18.