If, as a nonexempt employee, your work schedule varies from one week to the next, your employer may pay you under a fluctuating workweek plan.
If you and your employer agree to this method of compensation, how will the arrangement work?
Determining rate of pay
If your work agenda changes from week to week, the number of hours you put in will either increase or decrease in a “fluctuating workweek” schedule as defined under the Fair Labor Standards Act (FLSA). Dividing your total pay in a workweek by the number of hours you actually worked determines your regular rate of pay.
Fluctuating workweek method
As a nonexempt employee, you will receive a weekly salary under the fluctuating workweek plan that remains the same no matter how many hours you work up to 40 hours per week. If you work beyond that, you will receive additional overtime pay in the amount of at least 0.5 times your average hourly rate for each hour you work beyond 40. Keep in mind that the fluctuating workweek method depends on hours that change week to week. You must also agree to the fixed salary plan you work out with your employer.
Adding on through the Bonus Rule
Effective as of August 7, 2020, the FLSA “Bonus Rule” allows employers to pay bonuses, commissions or other incentive-based pay in addition to the employee’s fixed salary when using the fluctuating workweek plan. Employers must include such payments when calculating the employee’s regular rate.
If you feel you are not receiving the pay you are due under the fluctuating workweek method or have questions about the plan your employer has not answered to your satisfaction, you may wish to seek legal counsel.