DOL Places Further Limits on Fluctuating Workweek Method of Payment

The fluctuating workweek method of payment has the potential to save employers money. It allows an employer, under certain circumstances, to pay a non-exempt employee a fixed salary for an agreed-upon number of hours, and half-time for hours worked over 40 in a workweek. However, on April 5, 2011, the U.S. Department of Labor (DOL) published a final rule, which took effect on May 5, 2011, that it claims has the effect of establishing that employers cannot pay bonuses and non-overtime premiums (e.g., attendance or safety bonuses, shift differentials for working undesirable hours, etc.) to employees being compensated under the fluctuating workweek method of payment. Nevertheless, the DOL made no substantive changes to the regulation at issue, and its position is merely stated in the preamble to the final rule. Moreover, the DOL based this position, at least in part, on its own interpretation of Supreme Court precedent, which is not necessarily binding on courts.