Second Circuit Upholds Fluctuating Workweek Method of Calculating Overtime

The U.S. Court of Appeals for the Second Circuit addressed for the first time the use of the fluctuating workweek (FWW) method, upholding the employer’s calculation of overtime pursuant to that approach.

The fluctuating workweek (FWW) method of computing overtime is an alternative method of computing overtime for non-exempt salaried employees under the Fair Labor Standards Act.  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.  For instance, if an employee’s salary is $800 per week, and the employee works 50 hours, the regular rate is $16 per hour ($800/50).  One-half the regular rate is $8 per hour.  For the overtime, the employer owes an additional $80 (10 x $8).

In Thomas v. Bed Bath and Beyond Inc., the plaintiffs challenged their employer’s use of the FWW method. In affirming the use of the FWW method, the Second Circuit held that it does not require an employee’s hours to fluctuate above and below 40 hours per week. The Second Circuit further held that the employer’s practice of permitting employees to take paid days off on later dates after working on holidays or previously scheduled days off is consistent with the FWW method.