Fluctuating work week: the devil’s in the details
House of Delegates members walk past the south portico around at the end of the veto session at the Virginia State Capitol in Richmond on April 22, 2020. Legislation passed the same year created Virginia’s new Office of the Children’s Ombudsman. ( Pool Photo by Bob Brown/ Richmond Times-Dispatch)
By Kim Bobo
Late one night during the General Assembly’s special session this month, when the Senate was working on its budget amendments, senators approved Amendment 132 offered by Sen. Bill Stanley, R-Franklin, by voice vote, which usually means it is not expected to be a close vote. The amendment was described as simply conforming Virginia’s overtime law with the Fair Labor Standards Act, the federal version.
The official explanation said, “This amendment provides for additional employers to assert exemptions to the Virginia Overtime Wage Act for employees who otherwise meet exemption criteria set forth in the federal Fair Labor Standards Act (FLSA), and to set overtime pay for certain employees at a rate consistent with the FLSA.
The actual bill language said:
Notwithstanding any provision of § 40.1-29.2(D), an employer may assert an exemption to the overtime requirements of § 40.1-29.2 for employees who meet the exemptions set forth in 29 U.S.C. § 213(a) or for employees who meet the exemptions set forth in 29 U.S.C. §§ 213(b)(1) or 213(b)(11). For any hours worked by an employee in excess of 40 hours in any one workweek, an employer shall pay such employee a) an overtime premium at a rate not less than one and one-half times the employee’s regular rate, pursuant to 29 U.S.C. § 207 or b) another applicable pay methodology set forth in 29 U.S.C. § 207, notwithstanding any other provision of § 40.1-29.2, including § 40.1-29.2(B)(1) and (B)(2).
Gobbledygook, eh? This is where the devil is indeed in the details. Though the amendment died in budget conference committee, it could resurface in future legislative sessions.
When Virginia passed its Virginia Overtime Wage Act, it joined seven others states in disallowing the use of the Fluctuating Work Week, which is what clause b) in the bill language refers to – “another applicable pay methodology set forth in 29 U.S.C.”
The original VOWA outlawed using the Fluctuating Work Week, but the amendment to the budget, slipped in with such obtuse language, made the use of the Fluctuating Work Week calculation acceptable.
So, what’s all the fuss? Using the Fluctuating Work Week calculation can save employers money on payroll and reduce workers’ income.
Under the FLSA, workers who are covered by overtime (called non-exempt workers, meaning they are not exempt from overtime premium pay – as in they are covered by it) are usually paid a 50 percent premium for hours worked over 40. If an office manager earns $15 per hour for the regular rate, the overtime rate is $22.50 (1.5 x $15). So, if the person worked for 50 hours, the person would be entitled to $600 for the first 40 hours (40 x $15) and then an extra $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 workers regularly have different hours and they are paid the same weekly rate if they work under 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 a paralegal. It is also used sometimes for highly paid blue-collar workers and jobs that have huge fluctuations of hours, such as a landscaper who works 10 hours when it rains all week and 60 when it is sunny. Although some workers could benefit from the Fluctuating Work Week calculation, most do not benefit, and it is used by employers to reduce wages.
Let us assume that an office manager’s weekly salary is $600. If the person works 30 hours, the person is paid $600. If the person works 40 hours, the person is paid $600.
But, if the person works 50 hours, instead of calculating the overtime premium as 1.5 times the regular rate of $15 for 40 hours, the calculation divides the $600 salary by the number of hours worked to find the “new” hourly rate. $600 divided by 50 hours is $12 per hour. The overtime rate on the extra 10 hours is an extra $6 per hour times 10, or $60. This worker then earns a grand total of $660 for 50 hours instead of the $825 in the previous example.
If a worker regularly only worked 25 or 30 hours and got paid as if the person worked 40 and then every so often worked an hour or two over 40, this Fluctuating Work Week system would be fair. But that’s not what happens, which is why states are outlawing this calculation and why business groups sought to sneak in this change to Virginia’s Overtime Wage Act during the budget process.
Employers are regularly working their employees overtime and would rather pay $660 than $825 for 50 hours worked. This wage difference is why Virginia joined seven other states in outlawing 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. Legislators must be vigilant on 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.
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