Fluctuating workweek — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Fluctuating workweek

by on
in Compensation and Benefits,Human Resources

Q. My work hours fluctuate a lot depending upon the flow of work. To help manage its cash flow, my employer asked me to sign an agreement where I would receive a set salary each workweek regardless of the number of hours I work. In weeks where I work more than 40 hours, I am paid half-time for overtime hours, instead of time and a half. Can my employer do this? My position is nonexempt.

A. The Fair Labor Standards Act regulations permit employers to pay nonexempt employees a fixed salary for a fluctuating workweek and to compensate them for their overtime hours on a half-time basis. Under this method of compensation, an employee is paid a fixed salary covering whatever number of hours the job demands in a given week. With straight time already compensated in the salary, only one-half of the regular hourly rate must be paid for overtime.

An employer may use the half-time method of calculating overtime only if all three of the following conditions are met:

  1. The employee understands that his salary is meant to cover all hours worked.
  2. The parties have a clear understanding that the salary will not fluctuate even though the job demands that the employee work more or less than 40 hours in a given week.
  3. The salary is large enough to ensure the average hourly wage never falls below the federal minimum wage.

Leave a Comment