In November 2019, the U.S. Department of Labor (DOL) published a proposed rule to update the “fluctuating workweek” method for calculating employee overtime wages under the Fair Labor Standards Act (FLSA). The fluctuating workweek method provides employers a cost-saving option to compensate employees who are not exempt from the act’s overtime wage payment requirements.
Currently, the FLSA requires employers to compensate employees at a rate of one and one-half (1.5) times the regular wage rate for every hour they work over 40 during a workweek. However, FLSA regulations permit employers to compensate employees with only half (0.5) of their regular wage rate for overtime hours if certain conditions are met.
Under the proposed rule, employers could pay bonuses and shift differentials, and offer other incentive payments to employees who are paid under the fluctuating week method. The proposed changes were issued to clarify conflicting court rulings regarding this method.
Employer Takeaway
This is only a proposed rule, so it does not impose any new requirements on employers. AJM Associates, Inc. will keep you updated to new developments.