The Fluctuating Workweek and Failure to Calculate Regular Rate Properly

The fluctuating workweek is a problem for employers who are not adequately calculating the regular rate. The Fair Labor Standards Act requires that overtime pay be calculated at 1.5 times the employee’s standard pay rate for all hours over 40 in a week. Still, this calculation may not always be accurate when employees have varying schedules during the week. Employers should calculate an average time worked each day to ensure they pay their employees accurately and comply with federal law.

What is a fluctuating workweek?

A fluctuating workweek is a system that allows employees to receive overtime pay for working over 40 hours in a week without having them work exclusively on weekends. Employers have the option of paying one-and-a-half times this rate but are not required to do so by law. However, they must prove that their employees’ average earnings fall within federal standards if there is ever an audit or investigation into their payroll practices. The fluctuating workweek typically applies to professions where workers perform different tasks each day and cannot accurately track how many hours they spend on specific jobs throughout any given week (like commercial drivers who deliver products). Workers whose schedules vary dramatically from week to week may also benefit from using this method.

What is the regular rate of pay?

The “regular” or base hourly rate that an employee earns for each hour worked whenever they get paid by time, regardless of how many hours they spent on a job (for example, if an employee works three appointments this week and gets paid different rates at each one). The fluctuating workweek method allows employers to average out their employees’ earnings over several weeks to determine their regular rates so that you can calculate overtime accurately. Employers who use this system must have written agreement with their workers and proof that they spend no more than 50 percent of their working time doing tasks other than those assigned under normal circumstances. For instance, commercial truck drivers are often paid by the mile, but they are limited to driving up to 11 hours per day.

What is a regular workweek?

A “regular” or base work schedule for an employee does not vary from week to week. Employers who use this system may pay their employees based on hourly wages or salaries calculated using their regular weekly earnings rather than whatever overtime rate they get whenever they exceed 40 hours in one week at any point during the year. For example, suppose an accountant earns $50,000 annually and gets two weeks of vacation each year under normal circumstances. In that case, his employer can calculate what he would typically makeover 50 weeks (or more accurately 51 – 52 because there’s no such thing as 0%) to determine his regular pay rate. If the accountant works 50 weeks per year and gets paid $25 per hour, he would earn $125,000 annually (50 x 25). To figure out how much this employee should be making in overtime, you would divide that number by .05 to get an hourly wage of $250 – which means they are due another $62.50 for every week where they worked more than 40 hours ($500 / .95 = 500 + 62.75 =562.75 or rounded up to 63).

When can an employer use fluctuate workweek method?

On May 20, 2020, the Department of Labor (DOL) delivered refreshes fully intent on working on utilizing this technique.
You can utilize the FLSA fluctuating week’s worth of work technique to decide extra time on the off chance that you meet every one of the five of the accompanying prerequisites:
-The representative’s work hours fluctuate from one multi-week to another (no reach necessities saying hours should change above and under 40 hours out of every week—work hours need to shift).
-The representative acquires proper compensation that doesn’t fluctuate depending on the number of hours worked.
-The representative’s time-based compensation is consistently over the lowest pay permitted by law (either government or state the lowest pay permitted by law, whichever is higher).
-There is an “unmistakable and common agreement” among manager and worker
-You pay the worker the fluctuating week’s worth of work additional time pace of 0.5 for every extra hour worked.

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