Fluctuating workweek

Fluctuating Workweek: Definition and Overview
The fluctuating workweek is a pay structure recognized under the Fair Labor Standards Act (FLSA). It allows employers to compensate non-exempt employees with a fixed weekly salary, regardless of how many hours they work each week. This method is intended for workers whose schedules vary, some weeks they may work more than 40 hours, others fewer. When applicable, employers must still provide overtime pay for hours worked beyond 40 in a week.

For instance, if an employee works 35 hours one week and 40 the next, they receive the same salary for both weeks.

How the Fluctuating Workweek Method Functions
When applying this model, employers follow this formula to determine weekly compensation:

(Hourly rate ÷ 2) × overtime hours + fixed weekly salary + any bonuses, commissions, or additional pay

Step-by-step breakdown:

1. Calculate the effective hourly rate for the week.
2. Divide that rate in half to find the overtime rate.
3. Multiply by the number of overtime hours worked.
4. Add the overtime pay to the base weekly salary and include any incentive payments like bonuses or hazard pay.

Example:
Let’s say an employee has a base salary of $500, works 50 hours (10 overtime hours), and earns a $150 bonus that week.

• Hourly rate: $500 ÷ 50 hours = $10
• Overtime pay: ($10 ÷ 2) × 10 hours = $50
• Total pay: $500 + $150 bonus + $50 overtime = $700

When Is the Fluctuating Workweek Appropriate?
The fluctuating workweek model can only be used if the following criteria are met:

• Clear mutual understanding between the employer and employee that the worker is salaried, but overtime will be paid at a reduced rate depending on weekly hours.
• The employee’s salary must always meet or exceed the federal minimum wage, regardless of hours worked.
• The employee’s hours must legitimately fluctuate from week to week—regularly going above or below 40.

If an employee consistently works 40+ hours every week, and rarely works less, this method typically does not apply.

Fluctuating Workweeks and State Regulations
Different states have different rules regarding fluctuating workweeks. Some, including California, Alaska, and Pennsylvania, restrict or ban the use of this model. Others, like Connecticut, may limit its use based on industry (e.g., retail). Always confirm compliance with federal, state, and local laws before implementing this pay method.

What About Florida?
In Florida, this method is permitted. Employers may pay non-exempt salaried workers an overtime rate of half their regular hourly wage for hours worked beyond 40 in a week—assuming their weekly hours vary.

How Is It Different from a Belo Contract?
The fluctuating workweek only requires that both parties understand how pay will be calculated. There’s no need for a written agreement.
A belo contract, on the other hand, typically includes a formal agreement in writing where the employee explicitly agrees to the compensation structure, often under a bona fide contract arrangement.

Pros and Cons of the Fluctuating Workweek Model
Advantages:

• Predictable income for employees, even when weekly hours vary.
• Reduced overtime costs for employers.
• Potential for greater scheduling flexibility.
• Helps employees who prefer a guaranteed weekly wage regardless of workload.

Disadvantages:

• Employees working extra hours may feel undercompensated, since their overtime rate is halved.
• Can demotivate staff from working beyond 40 hours.
• Risk of legal challenges if not implemented properly, especially where state laws differ from federal standards.

Note:
Employers using payroll providers like Beyond should confirm that their platform supports fluctuating workweek calculations and state-specific compliance reporting.