Fluctuating Workweek Overtime Calculator

What is the fluctuating workweek method?

The fluctuating workweek method is a way to pay a non-exempt employee a fixed salary for hours that change from week to week, and still pay overtime. The salary covers all the hours worked in the week, so the regular rate is the salary divided by the hours worked, and it falls as hours rise. Overtime hours owe only half of that rate on top of the salary, because the salary has already paid the straight time. The rule is in 29 CFR 778.114. On a $800 salary, a 50-hour week has a regular rate of $16.00, an overtime premium of $80.00 and total pay of $880.00.

It is not a way around overtime. The employee is still owed an extra half the regular rate for every hour over 40, and the salary has to be high enough that the pay for each hour never falls below the minimum wage.

What conditions must be met to use it?

The regulation sets conditions that all have to be true for the method to apply. If one fails, overtime is worked out the ordinary way, at one and a half times the regular rate.

• The employee’s hours really do fluctuate from week to week.
• The employee receives a fixed salary that does not change with the number of hours worked.
• The salary is large enough that the pay per hour is at least the minimum wage, even in the week with the most hours.
• The employer and employee have a clear mutual understanding that the fixed salary is paid for all hours worked each week, whatever their number.
• Overtime hours are paid at least half the regular rate on top of the salary and any other pay that belongs in the rate.

The employer and employee do not have to agree on the overtime formula itself. Some states do not accept the method or require more, so check your state labor department before using it.

How do you calculate fluctuating workweek overtime?

1. Take the week’s fixed salary and add any other pay for the week that belongs in the regular rate.
2. Divide by the hours actually worked that week. That is the regular rate, which changes every week.
3. Take the hours over 40 and multiply by half the regular rate. That is the overtime premium.
4. Add the premium to the salary and other pay for total pay for the week.

The regulation works through a $600 weekly salary. The table reproduces it, with the regular rate rounded to the cent before the premium is worked out, as the regulation does.

How much does a $800 salary pay for different hours?

Pay rises with the hours, but slowly, because each extra hour adds only half of a shrinking rate. This table uses a $800 weekly salary with no other pay.

How does it compare with a salary that covers 40 hours?

The difference is what the salary is meant to pay for. If a $800 salary covers 40 hours, the regular rate is $20.00 and a 50-hour week owes $300.00 of overtime at time and a half, for $1,100.00. If the same salary is a fluctuating workweek salary that covers every hour, the 50-hour week pays $880.00. The method costs the employer less in a long week, which is why the conditions are strict, and why the agreement that the salary covers all hours has to be real. Without that agreement the method does not apply.

How do bonuses and shift premiums work with it?

Other pay for the week is added to the salary before dividing by the hours, unless it is excluded from the regular rate by the Fair Labor Standards Act. A $20 night shift premium on a $600 salary in a 48-hour week gives a regular rate of $12.92 and total pay of $671.68. A $100 productivity bonus in the same week gives $14.58 and $758.32, against $650.00 with no bonus. The calculator has a field for this other weekly pay.

The regulation also allows occasional deductions from the salary for willful absences or tardiness, or for serious violations of work rules, as long as pay does not fall below the minimum wage and required overtime. The salary does not change with the hours, so it is not cut for working fewer hours that week.

How do you check the minimum wage?

Divide the salary and other pay by the hours in the longest week. If the result is under the minimum wage that applies, the salary is too low for the method. At the federal $7.25, a $400 weekly salary supports up to 55.17 hours before the rate falls under the minimum, and a $600 salary supports up to 82.76 hours. Use the higher of the federal and your state minimum wage, since the higher one controls. The calculator warns when any week in the list falls below the minimum you enter.

Common fluctuating workweek mistakes

Most errors come from using the method when its conditions are not met, or from using the wrong multiplier.

• Paying one and a half times the fluctuating regular rate, which overpays; the method owes half time on top of the salary.
• Paying half time with no clear agreement that the salary covers all hours.
• Using it when hours do not really fluctuate.
• Cutting the salary in short weeks.
• Leaving a non-discretionary bonus or shift premium out of the regular rate.
• Ignoring the minimum wage check in a very long week.
• Using it in a state that does not allow it.