Reducing Overtime Expenditures Using the Fluctuating Workweek Method

Source: C. W. von Bergen, Employee Relations Law Journal, Vol. 33, no. 4, Spring 2008

Modifications to the Fair Labor Standards Act recently promulgated by the Department of labor (DOL) as the FairPay Overtime Initiative have produced an increasing number of workers subject to overtime payments and a concomitant increase in labor costs for firms. To adapt to this changing environment and to control employee expenditures, organizations may wish to examine the applicability of a relatively obscure provision of the Fair Labor Standards Act labeled as the Fluctuating Workweek Scheme. Employers might find this approach attractive because of its advantage of reducing the overtime rate due employees as the number of overtime hours worked increases.

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