Chinese Overtime Can Lead to Paycheck Theft: 5 Ways to Spot the Mistakes
The fluctuating work week payment method
The fluctuating workweek pay method, also known as the “variable workweek” or “part-time” method, is an area that most employees don’t know much about. Unfortunately, many employers don’t know much about this payment practice either and end up making mistakes using it. Under the fluctuating workweek method, you end up making less money per hour the more you work.
The bad news is that this is a legal way to pay employees under the Fair Labor Standards Act (FLSA). The good news is that after reading this article, you can usually identify your employer’s mistake fairly easily and figure out what to do if you have a wage and hour claim.
Standard overtime pay v. fluctuating work week
Standard Overtime Pay: Calculating overtime pay is taking your regular hourly rate and multiplying it by 1.5. As an example, an hourly rate of $10 becomes an overtime rate of $15, regardless of whether you work 1 overtime or 30 overtime hours. It’s clean, simple and fair.
Fluctuating Work Week (FWW) Pay: An employee is paid a fixed salary no matter how many hours they work. When the employee works more than 40 hours in a week, the fixed salary is divided by the total number of hours worked.
So, an employee who is paid a fixed salary of $400 per week and works 40 hours is paid $10 per hour. However, when that same employee works 50 hours a week, he ends up receiving $8 per hour ($400/50). The overtime rate is now 1.5 x $8 instead of 1.5 x $10. If the employee works 60 hours, the overtime rate is 1.5 x $6.66 ($400/60 = $6.66).
The good news: 5 mistakes employers make when using the FWW.
As noted above, most employers make mistakes when using the fluctuating work week and end up owing their employees back wages as a result. If there is a violation, even in a few select pay periods, you may be owed all of your back wages, not to mention double damages and attorneys’ fees.
Employers must meet certain requirements to be able to use this payment method:
– There must be a clear and mutual understanding that the employee’s fixed salary will cover all hours worked in a work week, even if a small number of hours are worked.
– The employee must be paid a fixed weekly wage considered regular time compensation for all hours worked in a workweek if the employee performs any work in the workweek.
– The employee’s hours must fluctuate from one work week to another.
– The regular hourly rate of pay used to base the part-time overtime rate must not be below federal minimum wage regulations.
1. Violation: We identify weeks where the employee worked less than 40 hours and was not paid wages
2. Violation: We identify bonuses, shift pay, vacation pay, commissions, or some other additional compensation that means the employee is not receiving a “fixed salary.”
3. Violation: We found that there was a complete lack of communication between the employer and the employee regarding the use of the fluctuating work week. A signed document may not be enough, but no signed document is a good sign that a breach has occurred.
4. Rape: We found weeks in which the employee worked so many hours that the rate falls below the minimum wage. In my example above, the fee of $6.66 is below the federal minimum wage of $7.25.
5. Rape: We found that the work schedule does not in fact fluctuate from week to week. An hour of variation here and there is not enough.
Whether you work in Texas, Illinois, California, New York, or another state, if you receive compensation under the fluctuating workweek method, it pays to have an employment attorney review your pay stubs for violations. Our law firm frequently finds that many employees paid by the fluctuating workweek method are victims of wage scams.