Screen clip from Notice of Proposed Rulemaking
U.S. DOL Issues Notice of Proposed Rulemaking

On November 5, 2019, the U.S. Department of Labor published a proposed rule that would make it easier for some employers to apply the “Fluctuating Workweek” method of calculating overtime pay for certain non-exempt employees.

Background

For those not familiar with the concept, the fluctuating workweek method is one way of calculating overtime pay for non-exempt employees who are paid a fixed salary but whose hours fluctuate from week to week. The fluctuating workweek method can be extremely advantageous for employers because it allows an employer to pay a non-exempt employee a fixed salary covering all of the employee’s straight-time work, regardless of the number of hours worked. If an employee works overtime, they still receive premium pay for each hour worked, but the rate is one-half of the employee’s regular rate instead of 1.5 times the regular rate. For a full explanation of this method and the conditions under which it can be used, check out our earlier explanation here.

Under the current rules, several conditions must be met before an employer can use the fluctuating workweek method. These include:


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Note – This post has been updated to correct a calculation error noted below.

The impending increase in the minimum salary for the executive, administrative and professional exemptions under the FLSA has many employers looking for ways to manage overtime costs for newly-reclassified employees. As part of that search, you might have heard of this idea called the “fluctuating workweek method” for calculating overtime as one alternative that can yield major savings. So what is this method, and how does it work?


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