19, 1986).) “Bonus Rule”/Final RuleĮffective August 7, 2020, the Fluctuating Workweek/“Bonus Rule” Final Rule clarifies that employers can pay bonuses or other incentive-based pay, such as commissions or hazard pay, above and beyond workers’ fixed salaries when they are paid using the fluctuating workweek method. (For these employees, the basic principles of calculating the regular rate that apply to a “workweek” also apply in the same way to a “work period.” See 29 CFR 553.233 WHD Opinion Letter FLSA 1216, 1986 WL 1171126 (Nov. For example, the fluctuating workweek method would not apply to employees of public agencies engaged in law enforcement or fire protectionĪctivities who receive a salary as compensation for working specific, fixed hours within a work period (up to 28 days) under Section 207(k) of the FLSA. Note: The fluctuating workweek method cannot be used if the employee’s salary is understood to be compensation for a specific, fixed number of hours per workweek. To use the fluctuating workweek method, employees’ hours actually must change on a week-to-week basis, and employees must receive the agreed-upon fixed salary even when they work less than their regularly scheduled hours. One condition for using this method is that the employer and employee agree that the set salary is compensation (apart from overtime premiums and any additional non-excludable pay) for all of their hours worked each workweek, whether they work few or many hours. The employee then receives at least an additional 0.5 times (or additional “half time”) that rate for each hour worked beyond 40 in the workweek.
The average hourly rate will change from week to week depending on how many hours the employee actually worked. Under the fluctuating workweek method, overtime pay is based on the average hourly rate produced by dividing the employee’s fixed salary and any non-excludable additional pay (e.g., commissions, bonuses, or hazard pay) by the number of hours actually worked in a specific workweek. In weeks when the employee works more than 40 hours, the employee receives additional overtime pay for each hour of work over 40. In other words, the employee’s weekly salary does not change whether the employee works 30 hours, 40 hours, or more.
ANNUAL BILLABLE HOURS SPREADSHEET PLUS
Under the fluctuating workweek method, which is explained at 29 CFR 778.114, nonexempt employees receive a set weekly salary no matter how many hours they work, plus additional overtime pay when they work more than 40 hours in one workweek. But there are also other allowable ways to compensate nonexempt employees and to calculate the overtime pay they are owed. Many employers simply pay an hourly rate and overtime at time and one-half that hourly rate for each hour over 40. Fact Sheet #56A provides additional information about determining the regular rate. An employee’s regular rate is calculated by dividing the employee’s total pay (except for certain statutory exclusions) in any workweek by the total number of hours actually worked in that week. Some employees are paid hourly, while other employees are paid on a different basis, such as salary, commission, or piece rate. It also requires that they receive overtime pay at a rate of at least time and one-half their regular rate for each hour they work over 40 in a workweek.
The FLSA requires that employers pay most employees in the United States at least the federal minimum wage for each hour they work. This type of schedule is called a “fluctuating workweek.” As a result, the total number of hours an employee works may increase or decrease from one week to the next.
Many employees have work schedules that vary from week to week.