The Fair Labor Standards Act (FLSA) requires an employer to pay an employee overtime for hours worked in excess of 40 during a workweek unless the employee falls within one of the FLSA’s exemptions. An issue that is frequently litigated under the FLSA is whether an employee has been properly classified as exempt versus nonexempt.
If an employee goes to court and can show that he or she should have been classified as nonexempt and therefore paid overtime for hours worked in excess of 40 in a week, the court must then determine how to calculate the back pay the person is owed.
In a case that delves into the so-called “fluctuating workweek method” for calculating overtime pay, the U.S. Court of Appeals for the Fifth Circuit ruled recently in Hills v. Entergy Operations, Inc., No. 16-30924 (5th Cir. 2017), that an employer cannot necessarily calculate overtime using the “fluctuating workweek method” for nonexempt employees who were paid a salary and who worked a weekly schedule alternating between two fixed hourly amounts (36 hours one week, 48 hours the other week).
According to the Fifth Circuit, the fluctuating workweek method for calculating overtime can be used only if there is a clear understanding between the employee and employer that the agreed-upon salary was intended to cover any “unlimited” amount of hours the employee may work during a given week, and that it is not designed to be used simply because the employee’s schedule fluctuates on a set basis from week to week.
A copy of the court’s ruling is available here.
Members of the Center for Workplace Compliance (CWC) can read more here.