Fluctuating
workweek overtime pay is a way to comply with the
overtime pay requirements of time and half pay for
all hours worked in excess of 40 in a workweek when
an employee’s time fluctuates from week to week.
Employers whose employees work a lot of hours part
of the year and very little hours a week another
part of the year usually use it. For example,
fluctuating workweek overtime pay is often used
by lawn maintenance companies and by golf courses.
Fluctuating workweek overtime
is legal as long as the following conditions are met: 1) The
employee must be on a guaranteed weekly salary which is paid to the
employee as long as the employee performs any work in the workweek.
No pay is required for a workweek in which the employee is out for
the entire workweek and performs no work in that workweek. Pay
periods can still be bi-weekly, semi-monthly, or monthly; but the
work hours have to be computed weekly to determine the hours worked
each workweek. For this reason, we suggest that pay periods
be either weekly or bi-weekly when an employee is on a fluctuating
workweek overtime pay schedule so the pay periods will correspond
with each workweek. 2) The hours of the employee must fluctuate
from workweek to workweek. However, there are no rules as to how much
or how little the hours must fluctuate from workweek to workweek.
3) The regular hourly rate of pay which is used to base the half time
overtime rate must be at least the minimum wage which is currently
$6.55 in North Carolina.
Here's how
it works: Let's say an employee's
guaranteed salary is $350.00 a week and
the employee works 52 hours one workweek.
The employer is to divide the $350.00
guaranteed weekly salary by 52 hours to
get the regular hourly rate of pay for
that workweek which computes out to be
$6.73 an hour. In this example,
the employee actually earned $6.73 an
hour straight time rate for all the hours
including the hours worked in excess of
40. Now the employer owes the employee
the half time rate for the hours worked
in excess of 40. In this example,
it is for 12 hours. Please note
that the overtime rate is a "time and
a half rate" and the employee in this
example has already received the "time
rate" and is now due the "half rate" for
the overtime hours worked in excess of
40. To do this, the employer is
to divide the $6.73 rate in half which
compute to $3.37 an hour [rounded off]
for the "half rate" which is then multiplied
by the 12 overtime hours which computes
to $40.44 [$3.37 an hour X 12 hours =
$40.44]. The employee is due an
additional $40.44 gross for the 12 hours
overtime worked in the workweek.
In this example, the employee is due a
total gross pay of $390.44 for all of
the hours worked in the workweek for both
the straight time hours and the overtime
hours [$350.00 + $40.44 = $390.44].
The more hours worked in a workweek, the
less the regular hourly rate of pay will
be. The regular rate can go all
the way down to the minimum wage, but
that is it. Therefore, using the
example of a guaranteed salary of $350.00
a week, the most the employee could work
in a workweek under the fluctuating workweek
overtime method for this example is approximately
67 hours [$350.00 divided by $6.55 an
hour = 56.91 hours]. The overtime
half time pay cannot be a part of the
$350.00 salary that is for the total straight
time pay for all of the hours including
the "straight time" pay for the hours
over 40. The employee is still getting
time and a half pay for the hours worked
in excess of 40 in a workweek. Overtime
hours are based on each individual workweek
[each workweek stands on its own] and
not by pay period or by month or by any
other period of time. Therefore,
an employer cannot base the overtime hours
on the total hours worked in a bi-weekly
or a semi-monthly pay period. To
determine the number of overtime hours
and for the calculation of overtime hours,
each workweek stands on its own.
North Carolina Department of
Labor
Wage and Hour Bureau
1101 Mail
Service Center
Raleigh, NC 27699-1101
(919) 807-2796 or (toll-free NC only) 1-800-NC-LABOR
Web site: http://www.nclabor.com
