Employers that use the Fair Labor Standards Act's fluctuating workweek method to calculate pay should take heart! Making one innocent deduction mistake doesn’t mean you can never use the method again.
The fluctuating workweek method allows an employer to pay a fixed weekly salary, regardless of the number of hours worked in a week, but sets the overtime rate based on the total number of hours worked in the week for which the calculation is based.
The employer can’t deduct sick time from the fixed weekly salary under most circumstances. However, the 5th Circuit Court of Appeals recently showed leniency for isolated foul-ups.
Recent case: Speedee Cash paid Melissa Conne under the fluctuating workweek method. But the company mistakenly deducted the equivalent of one day from her set salary when she was sick one week.
Conne sued, arguing that the deduction destroyed her employer’s ability to use the method thereafter. The 5th Circuit Court disagreed. It ruled that a one-time mistake by an employer that otherwise was acting in good faith did not mean it was barred from using the method again. The court cited a U.S. Labor Department opinion letter, which stated “an employer utilizing the … method of payment may not make deductions from an employee’s salary for absences …. If the deductions are made frequently or consistently, then the practice … would raise questions as to the validity of the compensation plan.” (Conne v. Speedee Cash, No. 06-60377, 5th Cir., 2007)