Fluctuating Work Week Ripoffs

The fluctuating workweek method is a formula for calculating overtime that was formerly referred to as “Chinese overtime.” It is legal under federal law and the laws of most states, but only if all of the law’s requirements are followed.

 This formula allows an employer to save money on overtime costs. Compared to the standard overtime calculation method, an employee paid under the fluctuating workweek method could be earning hundreds of dollars less per week.  However, when employers don’t follow the strict rules required to use this method of payment, the fluctuating workweek calculation may be disallowed and the employer may have to pay his workers the standard method.

Here are two ways that employers save money using the fluctuating workweek method. 

First, instead of paying an hourly rate plus time and half for overtime hours over 40, using the fluctuating workweek method, an employer can pay a fixed salary and an additional half time of the employee’s hourly rate for overtime hours based on the number of hours worked. 

Second, the hourly rate is not based on a forty hour workweek. Instead it is based on the number of hours the employee actually works.  If an employee’s base salary is $500 per week and she works forty hours per week, her hourly rate is $12.50.  If she receives the same base salary but works 50 hours, her hourly rate is only $10 per hour.  The more overtime hours the employee works, the less she gets paid per hour.

Violations of the fluctuating workweek rules most often occur under these circumstances:

1. The employee works a regular schedule and her hours do not fluctuate.
2. The employer fails to include all proper payments to the employee when calculating the hourly rate. Where an employer fails to include commissions, bonus or holiday pay into the hourly rate calculation, it may be violating the fluctuating workweek rules.
3. The employer fails to pay his employees the full base salary in weeks where the employee works less than forty hours in a week. The employer cannot have it both ways. If the employer is going to pay a base salary, the salary has to be paid whether the employee works more than forty hours or not.
4. The employee works so many hours in a week that the hourly rate falls below the minimum wage.
5. The employee and employer did not have an agree that they would be paid according to the fluctuating workweek method.

If you think your employer failed to pay you at the proper overtime rate as required by law, contact the Marlborough Law Firm today for a free consultation