Fluctuating work week: the devil is in the details
By Kim Bobo
Late one night during the Special Session of the General Assembly this month, as the Senate worked on its budget amendments, Senators approved Amendment 132 proposed by Senator Bill Stanley, R-Franklin, by vote vocal, which usually means it shouldn’t be a close vote. The amendment was described as simply complying with Virginia’s overtime law with the Fair Labor Standards Act, the federal version.
The official explanation read: “This amendment provides that other employers can claim exemptions from the Virginia Overtime Wage Act for employees who otherwise meet the exemption criteria set out in the federal Fair Labor Standards Act (FLSA) and set overtime wages for those employees. certain employees at FLSA compliant rate. .
The actual language of the invoice read:
Notwithstanding any provision of § 40.1-29.2(D), an employer can claim an exemption from the overtime requirements of § 40.1-29.2 for employees who meet the exemptions set out in 29 USC § 213 (a) or for employees who meet the exemptions set out in 29 USC §§ 213 (b) (1) or 213 (b) (11). For all hours worked by an employee in excess of 40 hours in a work week, an employer must pay that employee a) overtime premium at a rate of at least one and a half times on employee’s regular rate, in accordance with 29 USC § 207 or b) another applicable compensation method set out in 29 USC § 207, notwithstanding any other provision of § 40.1-29.2, including § 40.1-29.2(B) (1) and (B) (2).
Gibberish, eh? This is where the devil is indeed in the details. Although the amendment died in committee of the budget conference, it could resurface in future legislative sessions.
When Virginia passed its Virginia Overtime Wage Act, it joined with seven other states in banning the use of the fluctuating work week, to which clause (b) of the bill’s language refers – “a other applicable compensation method set out in 29 USC “
The original VOWA prohibited the use of the fluctuating workweek, but the budget amendment, introduced in such obtuse language, made the use of the fluctuating workweek calculation acceptable.
So what’s all the fuss? Using the fluctuating work week calculation can save employers money on payroll and reduce workers’ incomes.
Under the FLSA, workers covered by overtime (called non-exempt workers, meaning they are not exempt from overtime premium – as in are covered by it) generally receive a 50 per cent premium for hours worked beyond 40 years. If an office manager earns $ 15 an hour for the regular rate, the overtime rate is $ 22.50 (1.5 x $ 15). Thus, if the person worked for 50 hours, they would be entitled to $ 600 for the first 40 hours (40 x $ 15) and then to an additional $ 225 for the remaining 10 hours (10 x $ 22.50) for a grand total. of $ 825.
The FLSA also allows workers who regularly work fluctuating hours to have a different calculation using the fluctuating work week calculation, but only if the workers regularly have different hours and receive the same weekly rate. if they work less than 40 hours. The fluctuating work week calculation is used most often with salaried workers who are still eligible for overtime, such as an office manager or paralegal. It is also sometimes used for highly paid blue collar workers and jobs that have huge fluctuations in hours, such as a landscaper who works 10 hours when it rains all week and 60 when the weather is good. While some workers may benefit from the fluctuating work week calculation, most do not and employers use it to reduce wages.
Suppose the weekly salary of an office manager is $ 600. If the person works 30 hours, they are paid $ 600. If the person works 40 hours, they are paid $ 600.
But, if the person works 50 hours, instead of calculating the overtime premium at 1.5 times the regular rate of $ 15 for 40 hours, the calculation divides the salary of $ 600 by the number of hours worked to find the “new” hourly rate. $ 600 divided by 50 hours is $ 12 an hour. The overtime rate over the 10 overtime hours is an additional $ 6 per hour multiplied by 10, or $ 60. That worker then earns a grand total of $ 660 for 50 hours instead of the $ 825 in the previous example.
If a worker regularly worked only 25 or 30 hours and was paid as if he worked 40 hours and occasionally worked an hour or two out of 40, this fluctuating work week system would be right. But that’s not what’s happening, which is why states are banning this calculation and why business groups have sought to introduce this change to Virginia’s overtime law during the budget process.
Employers regularly work overtime for their employees and prefer to pay $ 660 rather than $ 825 for 50 hours worked. This difference in pay is why Virginia joined with seven other states in banning the use of the fluctuating work week.
Virginia employers are struggling to find workers. Paying workers more and not trying to deny them real overtime pay will help employers attract and keep good workers. Lawmakers need to be vigilant about language because the devil is in the details.
The devil was definitely in this amendment.
Kim Bobo is Executive Director of the Virginia Interfaith Center for Public Policy.