The Fluctuating Workweek and Overtime Pay

 

By Greg Smith posted in Wage & Hour Claims on Tuesday, May 10, 2016

The “fluctuating work week” can be a real headache, and I’d never suggest an employer actually use it because it could mean trouble. Employers like it because the fluctuating work week is a way of paying their non-exempt hourly employees something like a salary, but with overtime pay, too.

Assume that ABC Company owns golf courses, and they love their employee Bart, who’s guaranteed salary is $400.00 a week (and Bart loves this when he only works around 20 hours per week because it works out to $20 an hour – and that happens a lot during weeks when it snows or rains a lot). But when he works 50 hours in a week, he feels shortchanged because that works out to be $8 an hour, and he only gets and extra $40 dollars for those ten hours he worked beyond 40.

So, Bart calls an attorney and says, “Hey, I think I may be owed some overtime, but my employer keeps telling me because I’m on some sort of fluctuating-work-week thing he doesn’t have to pay me overtime just “half-time,” is he right? Or, am I being cheated?”

The attorney, Jack, divides the $400.00 guaranteed weekly salary by the 50 hours Bart has worked, which gives him the actual hourly rate of $8.00 an hour ($8 an hour is okay under this method because it exceeds minimum wage, which is currently $7.25 an hour (4-9-16)).

Jack tells Bart the $8 an hour figure is called the “straight time,” and explains that, straight time is simply determined by taking all money paid divided by all hours worked. Jack explains that if the employer was just paying Bart normally, ABC would have to take the $8 an hour of straight time, and cut it in half to get the “half time.” Straight time + half time = overtime. So, $8 + $4 = $12. So, overtime, or “time and a half” is really just straight time plus half time.

“Okay, so what about the ten hours I worked beyond 40?” asks Bart. “Am I owed $122 for those hours? You know $12 times 10 hours.”

“Well,” says Jack, “ABC already paid you $8 an hour for every hour you worked, so if they owe you money, they will owe you $4 an hour times the 10 hours, or $40. The fluctuating work week may be the least understood subject in all wage and hour law.”

“Why don’t they owe me $12 an hour for those hours past 40?” asks Bart. “That’s time and half, right?”

“Yes, $12 is time and a half, but again, they already paid you ‘time,’ so they only owe you the half time.”

“Okay.” Says, Bart. “So, how does that half time, or $4 an hour, work into this?”

“The half-time pay can’t be a part of the $400.00 salary – it must be paid on top of your salary.”

“I’m confused,” says Bart. “Maybe I should just ask them to pay me $10 an hour, instead of $400 weekly. That way, I’d get $400 for 40 hours, and $150 for the extra ten.”

“But, Bart, if you do that, you’ll only get $200 when you work 20 hours during those snowy and rainy weeks,” replies Jack. “You see, at times the fluctuation work-week benefits you, and at times, it benefits ABC. That’s the theory behind it.”

“Okay, that makes sense.”

“And remember that the half-time hours are based on each individual workweek, not by pay period.”

“Okay, so if I work 50 hours this week, and only 20 next week, that would be 70 hours in my paycheck, which would average 35 hours per week, which is below 40 hours per week.”

“Right, Bart, and ABC cannot average both weeks. Each week has to stand on its own. In other words, they have to pay the extra half-time when you work more than 40 hours per week in any work week.”

“I see.”

“Okay, Bart, are you 1) sure ABC pays you a fixed salary each week that does not vary based on the number of hours worked?”

“Yes, they pay me the same salary every week – it’s always $400.”

“Okay, so 2) ABC and you clearly have a ‘clear mutual understanding’ that ABC will pay that $400 fixed salary regardless?”

“Yes.”

“Okay, well, 3) the fixed salary at least equals the the minimum wage.”

“Right.”

“And, 4) your hours fluctuate from week to week both above and below 40 hours?”

“Yes.”

“Okay, well, since those elements are present, ABC can likely use a ‘half-time’ overtime calculation. In other words, since they’ve already compensated you for all your straight time hours, they only need to pay the overtime premium – the half time. But, if you get to the point where you are pretty much working over 40 hours all the time, then ABC cannot use this method. In other words, there must be fluctuation, which sometimes benefits you, and at times, benefits the employer.”

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Tags: wages

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