Labor and Employment: The “Fluctuating Work Week” - An FLSA Mirage

May 29, 2013

By: James Holahan

Rochester Business Alliance, May/June 2013

“There are mirages in the labor relations and employment desert. Concepts and principles that, for a moment, you see and understand, but moments later you have confused or misapplied. The “fluctuating work week” method of calculating overtime is one of those employment law mirages. At first glance, it appears as an oasis for employers in the FLSA desert – then, like a mirage, disappears when carefully scrutinized and correctly applied. The “fluctuating work week” (FWW) method of calculating overtime is an alternative to the familiar “time and one-half” method for paying non-exempt employees who actually work more than 40 hours in a work week. It was first recognized more than 70 years ago by the United States Supreme Court in Overnight Motor Transport Co. v. Missel, 316 U.S. 572 (1942) and later codified in the federal wage and hour regulations. 29 C.F.R. §778.114.

Often referred to as the “half-time” measure of overtime, it applies: (1) if there is a mutual understanding between an employer and a non-exempt employee that the employee will be paid a fixed weekly salary no matter how many hours that employee works in a week, (2) if the “fixed salary” is sufficiently large so that the employee’s regular rate of pay never drops below the minimum wage (federal or state), (3) if the employee’s work week fluctuates both over and under 40 hours per week, and (4) if the employee is paid a “halftime” overtime premium for hours worked beyond 40 in a week. Using the “half-time” method, the employee’s overtime rate is one half (1/2) of the rate determined by dividing the employee’s weekly salary by the number of hours that the employee actually works in a week.”

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