NPRM for Fluctuating Workweek Method of Computing Overtime

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Recently, U.S. the Department of Labor (DOL) announced a Notice of Proposed Rule Making (NPRM), which would allow employers subject to the Fair Labor Standards Act (FLSA) overtime requirement to offer incentive-based pay and other bonuses to employees whose hours vary from week-to-week. The NPRM seeks to provide clarity to ensure the salary and payments are compatible with the use of the fluctuating workweek method under the FLSA.

The FLSA requires time-and-one-half the regular rate of pay for any hours above 40 that an employee works in a week unless the employee is “exempt.” For some employees, however, there is the alternative “fluctuating workweek method” under the FLSA,  in which employers have another method of calculating overtime when employee work hours fluctuate.

The NPRM lays out the plan to revise the existing regulations implementing the FLSA fluctuating workweek regulation (29 CFR 778.114) to explain the circumstances under which employers may use an alternate method. Changes will include explicitly stating requirements, adding examples, improving readability, and changing the title of the regulation to reflect the purpose of the subsection better.

The public has 30 days to review the NPRM (RIN Number: 1235-AA31) and is encouraged to submit comments on the proposed rule.