Takeaways

• In Lutz v. Froedtert Health, the Seventh Circuit ruled a health system correctly included shift differentials, weekend differentials, and incentive pay in employees’ regular rate of pay before calculating overtime, consistent with the FLSA and Wisconsin law.
• The court confirmed that although Wisconsin wage law does not define “regular rate,” it should be interpreted consistently with the FLSA on both overtime and holiday pay calculations.
• Employers may exclude holiday premiums from the overtime regular rate calculation if premiums are paid at least 1.5 times the employee’s bona fide hourly rate.

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The U.S. Court of Appeals for the Seventh Circuit held that a Wisconsin health system employer’s practice of including shift differentials, weekend differentials, and incentive (“Extra Pay”) premiums into employees’ regular rate of pay before applying a half-time overtime multiplier complies with both the federal Fair Labor Standards Act (FLSA) and the Wisconsin Wage Payment and Collection Law (WWPCL). Lutz v. Froedtert Health Inc., No. 25-2802 (7th Cir. July 27, 2026).

The court also concluded that the employer properly excluded holiday pay premiums from the regular-rate calculation because the premiums exceeded 1.5 times employees’ base hourly rates.

Importantly, although Wisconsin law does not define the “regular rate” for overtime purposes, the court found that Wisconsin law must be interpreted to be consistent with the FLSA. Therefore, the...

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