The fluctuating workweek approach is employed for nonexempt employees, providing a consistent weekly salary regardless of their hours worked, coupled with additional overtime compensation when their workweek exceeds 40 hours. The employee’s weekly salary remains constant regardless of the different hours they may work. If their workweek surpasses 40 hours, they receive extra overtime pay for each hour beyond this threshold.
This method bases overtime pay on the average hourly rate, derived by dividing the fixed salary and any non-excludable extra pay (e.g., commissions, bonuses, hazard pay) by the actual hours worked during a given workweek. The average hourly rate varies weekly depending on actual hours worked. For hours beyond 40 in the workweek, the employee receives only an additional 0.5 times (or “half time”) of that rate (as opposed to the (1.5x) federal overtime compensation.)
For this method’s application, agreement between employer and employee is crucial, affirming that the fixed salary covers all hours worked each week (excluding overtime premiums and any additional pay). Employees’ weekly hours must genuinely fluctuate, and the agreed-upon fixed salary must be provided even for weeks with fewer hours than their standard schedule.
It’s important to note that the fluctuating workweek method isn’t suitable if the salary is intended to cover a specific, fixed number of hours per workweek. For instance, it wouldn’t apply to public agency employees engaged in law enforcement or fire protection tasks, receiving a salary for specific, predetermined hours within a work period.