In its July 7, 2009 ruling in Truman v. DeWolff, Boberg & Associates, Inc., a federal district court in Pennsylvania ruled that an employer could be held liable for unpaid overtime under the Pennsylvania Minimum Wage Act for work performed by a Pennsylvania-based employee outside the United States, even though the federal Fair Labor Standards Act (“FLSA”) expressly excludes such work from its overtime provisions. The Truman case involved claims for unpaid overtime brought by a former employee of a consulting company under the FLSA and the Pennsylvania Minimum Wage Act, both of which generally require the payment of premium pay for hours worked in excess of forty hours in a workweek. The former employee was a Pennsylvania resident who had been based at his employer’s Pennsylvania office. He had, however, worked for the employer in England for six months and in Canada for one week. The employer argued that the former employee was not entitled to recover for unpaid overtime for workweeks in which the employee’s services had been performed entirely outside the United States.

The FLSA contains an express statutory exemption from its overtime and minimum wage provisions for workweeks in which all work is performed outside the United States, and pursuant to that exemption, the court held that the former employee had no federal claim for unpaid overtime for the workweeks spent outside the United States. However, the court noted that the Pennsylvania Minimum Wage Act contains no corresponding exemption. Moreover, the court observed that the Pennsylvania law had been interpreted to apply to work performed by Pennsylvania residents outside the State of Pennsylvania. Consequently, the court held that the former employee could pursue his claims for unpaid overtime under Pennsylvania law for the workweeks spent in England and Canada.

The Truman decision illustrates the importance of state as well as federal law in determining whether an employee is entitled to premium pay for overtime hours. Although many states have overtime requirements comparable to those of the FLSA, the state exemptions to those requirements do not always match up with the federal exemptions. Therefore, to minimize the risk of liability for unpaid overtime compensation, employers should review their compensation practices under applicable state law as well as under the FLSA and other applicable federal wage and hour laws.