DOL Clarifies Application of Fluctuating Workweek for Purposes of Overtime Calculation

In a recently-released opinion letter, FLSA2020-14, the U.S. Department of Labor provided some guidance on the use of the fluctuating workweek (FWW) method of calculating overtime.

As noted elsewhere in this E-Update, opinion letters respond to a specific inquiry but may be relied upon by other employers with regard to the issue at hand – in this case, the FWW method. Under the Fair Labor Standards Act, employers must pay non-exempt employees at least one-and-one-half times their regular rate for all hours worked over 40 in a workweek. The FWW method is an alternative method of computing overtime for non-exempt salaried employees.  If there is a clear and mutual understanding that the salary covers straight time pay for all hours worked, whether few or many, the additional overtime compensation is one-half the regular rate.

In the opinion letter, the DOL affirmed that the hours need not fluctuate both above and below 40 in order to use the fluctuating workweek method; they can, in fact, fluctuate only above 40. The DOL also offered the guidance that employers using the FWW method may not deduct from an employee’s salary for absences, such as when the employee has exhausted a sick leave bank or has not yet earned sufficient sick leave to cover an absence because of illness. The sole exception to this prohibition is an occasional disciplinary deduction for willful absences or tardiness or for violations of major work rules.