A Pennsylvania federal court held that fluctuating workweek method of calculating OT compensation, although legal under the Fair Labor Standards Act, violates the Pennsylvania Minimum Wage Act.
What is the fluctuating workweek overtime compensation method?
If an employee is classified as non-exempt, that employee must receive at least one and one-half times their regular rate of pay for overtime, or hours worked over 40 in a defined workweek.
The fluctuating workweek method of calculating OT compensation allows an employer to pay an employee a fixed, weekly salary, regardless of the number of hours worked. OT is then paid out at one-half times the regular rate of pay. The regular rate of pay is determined by dividing the fixed salary by the total number of hours worked in a workweek. This method of paying OT benefits the employer if employees generally work more than 40 hours per week (because the effective hourly rate is driven down).
Are you confused? Well, don’t worry PA employers, because it appears that you can’t use it in PA anymore.