Dive Brief:

• Eighteen state attorneys general have formed a coalition to oppose a U.S. Department of Labor (DOL) proposal to amend the fluctuating workweek method of computing overtime. The fluctuating workweek method allows employers, in certain circumstances, to establish a regular rate of pay for workers with varying schedules and pay them overtime at half that regular rate.
• DOL's proposed rule would include bonuses, premium payments and other additional pay in the calculation of the regular rate, which would decrease "an employee's regular and overtime rate of pay the more the employee works," according to the coalition. The coalition also said the rule would run contrary to decades of precedent and would "create unnecessary confusion for employers, potentially leading them to violate state laws and needlessly exposing them to costly enforcement actions."
• In a letter to Labor Secretary Eugene Scalia, the coalition members voiced support for the general requirement to pay nonexempt employees time and a half for all hours beyond 40 in a given workweek is essential to protecting workers' health and safety "by imposing a cost on employers who require their employees to work excessive hours" and ensuring that workers are fairly compensated for this work.

Dive Insight:

When an employee's hours fluctuate from week to week, employers are allowed to determine the regular rate based on hours worked and then pay overtime at half the worker's regular rate. The proposed rule clarifies that employers using this method must include incentive-based pay, including premium payments and bonuses, in that calculation.

Use of the fluctuating workweek method isn't widespread, but DOL estimated in its rulemaking that more than 700,000 U.S. workers meet criteria that would allow them to be compensated under the method. Despite the objections of the attorneys general in the coalition, Susan Harthill, partner at Morgan, Lewis & Bockius and former DOL official, previously told HR Dive that the proposal is good news for employers and may encourage more employers to consider using a fluctuating workweek calculation.

Some states, however, don't recognize DOL's fluctuating workweek method. According to a press release from New York AG Letitia James, a coalition member, "states such as Illinois and Pennsylvania use a modified fluctuating workweek method or apply it only in the narrow set of circumstances allowed under current law."