In August of 2020, the Wage and Hour Division of the Department of Labor issued an opinion letter with the designation FLSA 2020-14. In this letter, it detailed the rules for computing the pay rate of salaried employees. It also addressed questions regarding overtime calculations for the fluctuating workweek or FWW method.
The provisions detailed in FLSA 2020-14 will also affect states, including Massachusetts, which have their own minimum wage laws. These new rules will change the way overtime is calculated as one of many adaptations to work conditions in the new normal.
Time-And-A-Half Rules Still Apply For Hourly Rates
According to the FLSA, employers have to pay an overtime rate that is at least 1.5 times the regular hourly rate. There are, however, certain “exempt” occupations to this provision. This includes those who are in “bona fide” administrative, executive or other professional positions. People in fishing and farming are also among the exempt. For workers paid per hour, overtime calculations are simple. For example, the minimum wage in the state of Massachusetts is $12. Hence, minimum wage earners in Gloucester will be paid $18 for any hours they work overtime. If the worker is paid a fixed salary every week, however, the Wage and Hour Division has set a unique system in place.
Guidelines Now In Place For Fluctuating Workweeks
Those who work different hours each week will refer to the FWW method. The method applies to employees with fixed salaries that are independent of hours worked. That salary also has to be “equal to or greater than the minimum wage for the employee’s longest workweeks”, according to the WHD. Overtime will be equivalent to only half the “regular rate”, which is the weekly salary divided by the number of hours worked that week. Since the details of this arrangement can be the subject of dispute, both employees and employers are advised to consult an employment law attorney to settle matters if they become unclear.
FWW Applies To All Workers With Shifting Schedules, Says WHD
Workers paid weekly will still receive their full rate even if they work fewer hours during certain periods. Hence, employers are only obligated to pay them half the regular rate for every hour of overtime they work. The WHD also concluded that the FWW method applies to employees with fixed weekly salaries who consistently work over 40 hours a week. It was previously believed that the FWW method was only for employees whose hours “fluctuated above and below 40 hours per week." With the coming of FLSA2020-14, the WHD clarified that it will apply as long as the worker’s hours differ.
Workers with fixed salaries will be the most affected by the provisions detailed in FLSA2020-14. Those who don’t find these terms agreeable are advised to discuss their work schedules with their employers.