A disputed pay-math method held up in court - plus the loop the Supreme Court once flagged
A federal appeals court just backed a standard payroll method - and gave employers clarity on overtime and holiday pay.
On July 27, 2026, the Seventh Circuit ruled that Froedtert Health calculated overtime and holiday pay correctly for its hourly workers. The decision settles two technical pay questions that often trip up wage-and-hour teams.
The case began when a sterile processing technician sued Froedtert, the Wisconsin health system, on behalf of a certified class. The dispute reached back to a workweek in April 2023 and turned entirely on math, not on any claim of unpaid hours. She argued the employer used the wrong overtime formula and wrongly left holiday premiums out of its pay math. A federal district court sided with the employer and dismissed the case. She appealed.
The first dispute centered on overtime and shift differentials - the extra pay workers earn for less desirable hours. Froedtert totaled a worker's weekly pay, divided by total hours to reach a "regular rate," then paid an extra half of that rate for each hour over 40. That is the method the US Department of Labor endorses. The technician wanted overtime figured another way, separating the first 40 hours from overtime hours and applying a higher multiplier.
The court rejected her approach. It found her method would pay two workers differently even when they logged identical hours, simply because of when in the week they worked shift-differential hours. Froedtert's method, the court said, stayed consistent and still cleared the federal floor of one-and-a-half times regular pay. The court also noted that two other courts had already treated Froedtert's approach as compliant.
The second issue was holiday pay. Froedtert left holiday premiums out of the regular rate it used to compute overtime. The technician called that improper. The court disagreed, pointing to a specific exception for holiday premiums paid at time-and-a-half. It warned that folding holiday pay back in would create "pyramiding" - a loop of endless recalculations the Supreme Court flagged decades ago.
Wisconsin law did not change the outcome. The court read the state's wage rules to follow the federal standard and declined to send the question to Wisconsin's highest court.
For HR and payroll leaders, the ruling confirms that the Labor Department's standard overtime formula holds up in court, even with shift differentials and holiday premiums in the mix. The court's reasoning leaned on one point: the challenger's approach would pay identically-houred workers different amounts, while the employer's method treated them the same.
