Using the Fluctuating Workweek Compensation Method to Reduce Overtime Expenses in Public Organizations

Abstract

Modifications to the Fair Labor Standards Act promulgated by the Department of Labor as the FairPay Overtime Initiative in 2004 have produced an increasing number of workers subject to overtime payments and a concomitant increase in labor costs for public sector organizations. To adapt to this changing environment and to control employee overtime expenditures organizations may wish to examine the applicability of a relatively obscure provision of the Fair Labor Standards Act labelled the fluctuating workweek scheme. This approach becomes increasingly attractive to employers as worker overtime increases because a feature of this method is that the overtime rate due employees under this plan decreases as the number of overtime hours worked increases.