New York Fluctuating Work Week
Posted by Tamara
New York employees can be confused by the fluctuating workweek payroll system. The majority of employees are covered by the FLSA (Fair Labor Standards Act of 1938), which requires employees to be paid overtime at a rate of 1.5 times the usual hourly rate for time over 40 hours per week.
Under the fluctuating workweek system, however, employees receive only 50% of their usual hourly rate. Employees on this system are usually working in industries with seasonal hours. Under the fluctuating workweek payroll system, workers are paid a flat weekly rate, regardless of how many hours they work.
For example, Todd is on a fluctuating workweek payroll system and receives $500 per week whether he works 1 hour or 40 hours. When Todd works more than 40 weeks, he is eligible for overtime pay for the additional time at 50% his usual hourly rate. Hourly rate is calculated by dividing the weekly salary by the number of hours worked. If Todd works 30 hours, his hourly rate is $16.67 per hour.
If Todd works 70 hours a week, his hourly rate is $7.15 per hour. The additional 30 hours of overtime would be calculated at 50% of $7.15 or $3.58 per hour, for a total of $107.25. His weekly total would then be $607.25.
The fluctuating workweek payroll system has two advantages. The worker receives a stable income in a wildly varied industry. The employer spends less on overtime wages.
Employees on a fluctuating workweek system must understand how the payroll system works and be informed ahead of time. The explanation should be presented in writing, such as an offer letter, and the employee should be required to sign the document.
The system only works if the employee receives a salary and works less than 40 hours some weeks. A worker who puts in 40 to 50 hours would not qualify. An employee whose hours vary from 30 to 50 hours per week would qualify. In addition, federal and New York laws require that a worker’s hourly rate never drop before the minimum wage (federal or New York).
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