User:Hzha6086/sandbox

Fluctuating Workweek Overtime
Fluctuating Workweek Overtime, it could be called Fluctuating Workweek (FWW) method which was firstly approved in 1942 in America. This terminology simply refers to employees could receive fixed base salary and 1.5 times of fluctuating hourly regular rate for their overtime works weekly as compensation. The overtime premium rate is fifty percent the regular hourly rate which is different each workweek, if one employee work over 40 hours in a workweek. This method is utilised by employers whose employees must work many hours seasonally and work little hours part of the year. Fluctuating workweek method could be a labour cost saving tool in organisations compared with traditional method under Fair Labor Standards Act (FLSA).

Under the FWW scheme, an employer must pay a fixed weekly wage to employees even though the hours worked are less than 40 hours. As the agreement requires fluctuating working time of employees weekly instead of the stable forty hours each week, the regular rate per week is not fixed. The regular rate must be recomputed weekly by dividing the fixed weekly wage by the actual number of hours worked during each specific week. The regular rate is going to be lower while the number of hours worked increases. At the same time, organisations must spend more on the management expenditure coming from administrative challenges and the costs of computing programs for fluctuating workweek calculations as well.

For overtime work under fluctuating workweek method, Employee's overtime premium rate is fifty percent weekly regular rate using the employee’s fixed base salary divided by the actual actual number of hours in that workweek, then, multiplied by the number of overtime hours worked to get the total overtime premiums. As opposed to the traditional overtime calculation under Fair Labor Standards Act, which is directly 1.5 times of the fixed regular rate which is not affected by the number of hour actually worked in workweek. Employers could save money when employees in organisations usually have fluctuating work hours, compared to traditional overtime payment method.

In addition, the fluctuating workweek method could save labour costs for the organisations which have a number of employees whose working time is over 40 hours per week. On the contrary, fluctuating workweek scheme is a penalisation for organisations where are employees work fewer than 40 hours weekly, due to employers need to pay same amount of fixed base salary each week no matter how many hours employees worked.

According to the laws and government policies, for employers who want to use fluctuating workweek approach to calculate overtime payments, organisations should acquire professional legal and human resources guidance. If employers do not comply with applicable regulations of fluctuating workweek, whose liability will be considerable for employees.

Fluctuating workweek scheme is a lawful alternative method for compensating non-exempt employees. To use this method, employers must make sure that (1) hourly employees are not available for fluctuating workweek scheme which is only for non-exempt employees; (2) the fixed base salary must be paid weekly, which is not influenced by the number of hours worked; (3) employees must be paid at 1.5 times of fluctuating regular rate for excess overtime hours in the workweek; (4) the working time of employee’s workweek must fluctuate regardless of how much or how little; (5) the fixed base salary must be vast to make sure the regular payment rate will never lower than the government’s minimum wage; (6) both employers and employees must have a mutual understanding that the organisations are using FWW system to calculate overtime payments.

The fluctuating workweek method has not been utilised broadly in organisations. There are several disadvantages when an organisation is using fluctuating workweek system, including problems of employee morale, recruiting workers, retaining personnel, and administrative challenges in calculate overtime payments.

History
The fluctuating workweek method of calculation overtime has been on the books for decades. FWW method was approved by Supreme Court firstly in 1942, after the Fair Labor Standards Act which was issued in 1938. Then, department of labour regulation of fluctuating were issued in 1968.

Fluctuating workweek scheme could be utilised by organisations only for employees who were already identified as non-exempt workers. According to Fair Labor Standards Act which are for white-collar employees, exempt and non-exempt employees are determined by (1) how much they are paid; (2) how they are paid; (3) what kind of work they do. And only non-exempt employees could receive overtime pay. And the job description must satisfy certain salary requirement and job duties tests to qualify whether an employee is exempt or not. The last major revision is decades years ago, the FLSA regulations for testing duties became outdated and some organisations started utilising the vagueness of FLSA to avoid to pay overtime payments for employees. Exploiting the ambiguity of FLSA, employers could reclassify employees who were non-exempt as exempt.

For protecting the rights and equities of employees and with the increasing lawsuits, the Wage and Hour Division of the US Department of Labor (DOL) added new regulations existing in FLSA called the Fair Pay Overtime Initiative (FPOI) in 2004. The new FLSA regulations modernised, updated, and clarified the criteria for exemptions and removed legal problems caused by old regulations. Also, the new regulations improved overtime payments and provided overtime protections for additional 6.7 million American employees who were not protected by Fair Labor Standards Act previously. For reducing labour costs, fluctuating workweek method has started to be needed in recent years. Organisations have tried a lot of methods to decrease labour costs, such as outsourcing, employee leasing, downsizing and productivity improvements. Organisations have planned to reduce employee labor costs via controlling overtime work. It is less expensive to arrange longer hours for existing employees and pay overtime compensations instead of hiring and training new employees. The fluctuating workweek overtime compensation for current employees could save organisations’ costs and expenditures, chosen by a number of companies. Facing with increasing overtime costs, organisations need to think about approaches to lower these expenditures. Then, Fluctuating Workweek approach is available, due to this scheme has a key feature that the employees' overtime hourly rate decreases with the number of working hours per week increases under FWW.

Requirements for using fluctuating workweek
(1) Hourly employees are not available for FWW which is only for non-exempt employees.

Under Fair Labor Standards Act, only non-exempt employees could receive overtime payments paid by employers for their overtime works after forty hours. And the employees who receive an hourly wage cannot be paid through FWW method as they do not have fixed base salary weekly. Hourly employees are paid with an hourly regular rate which is fixed, which is not valid for using FWW. Under FWW pay system, employees' regular rate of pay is variable in different workweek, influenced by the number of time they actually worked.

(2) The fixed base salary must be paid weekly, which is not influenced by the actual number of hours worked.

Organisations using fluctuating workweek system must pay a fixed base salary to employees regardless of the number of hours they actually worked. Since the employee under FWW method must receive a fixed base salary and government does not permit employers reduce base salary of employees for any reasons, such as illness or personal business, this requirement is a disadvantage of FWW system and have been argued since it was issued.

(3) Employees must be paid at 1.5 times of fluctuating regular rate for excess overtime works in workweek.

For employees work forty hours a week, they could receive fixed amount of salary that is agreed by both employees and organisations. in addition to the fixed weekly basis salary, employees who work longer than 40 hours in a workweek must be paid 1.5 times of regular hourly rate for any excess hour. The overtime premium rate is fifty percent the regular rate of pay for each workweek.

(4) The working time of employee’s workweek must fluctuate regardless of how much or how little.

The federal regulations states that the salary is paid to employees who do not customarily work a regular schedule of hours. The interpretation of the requirement that the workweek be a fluctuating one has been addressed in the courts. The fluctuating workweek system is useless for employees who work fixed 40 hours per week.

(5) The fixed base salary must be vast to make sure the regular payment rate will never lower than the government’s minimum wage.

The FWW approach of overtime payments could be used when the organisations achieve the prerequisite, the salary must be vast to ensure that no workweek will be worked in which the employees' average hourly earnings from the salary fall below the minimum hourly rate applicable under Fair Labor Standards Act.

(6) Both employers and employees must have a mutual understanding that the organisations are using FWW system to calculate overtime payments. Traditional overtime payment

This requirement is a supplementary requirement for using fluctuating method provided by Fair Labor Standards Act. Employees in organisations must know that the employers are using FWW approach to calculate their overtime payments. Employers need to calculate employees' overtime payments precisely and be able to account for the amount of overtime through reliable evidence.

Traditional overtime pay
The calculation method for traditional overtime payments is different from calculation of overtime pay under fluctuating workweek method. Non-exempt employees covered by Fair Labor Standards Act must receive overtime pay for hours worked over forty hours in workweek with a rate that is 1.5 times of regular hourly rate of pay. The traditional regular hourly rate for overtime is calculated by dividing the fixed base salary for employees in any workweek by 40 hours. For example, if an employee is contracted to be paid $600 per week as salary, and the employee works 40 hours in the specific workweek, the employee's overtime hourly rate is calculating by dividing 600 by 40, which is equal to $15 per hour which cannot be changed at any time. Then, if the employee work longer than 40 hours, for each hour of overtime in excess of forty hours a week, the employee could receive 1.5 times $15 per hour, which is equal to $22.5 per hour.

Calculation of overtime pay under FWW
Under fluctuating workweek method, employee's overtime premium rate is fifty percent weekly regular rate using the employee’s fixed base salary divided by the actual number of hours worked in workweek, then, multiplied by the number of overtime hours worked to get the total overtime premiums. For an employee who work more than forty hours a workweek, the total overtime wage that an employee could receive is 1.5 times of the regular rate of pay. The difference between traditional calculation of overtime pay and FWW approach is the calculation formula for regular payment rate. For instance, if an employee's guaranteed salary is $600 a week and the employee works 50 hours in that workweek, the employer must divided the $600 fixed base salary by fifty hours to get the specific regular rate for that workweek, which is $12 an hour. Then, for each hour of overtime is excess of forty hours a week, the employee could receive 1.5 times $12 per hour, which is equal to $18 per hour.