Comments on The Fluctuating Workweek (“FWW”) Proposed Regulation
“Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.”
-- John Kenneth Galbraith
The Department of Labor (“DOL”) recently issued a proposed Fair Labor Standards Act (“FLSA”) regulation, Fluctuating Workweek Method of Computing Overtime under 29 CFR 778.114. See https://www.regulations.gov/document?D=WHD-2019-0006-0001. The fluctuating workweek (“FWW”) method is a way of paying overtime to salaried nonexempt workers. The salary covers the basic overtime due them, and they only get a so-called half-time premium for the overtime hours worked. We recently blogged on the DOL proposed regulation. See https://www.awrcounsel.com/blog/2019/12/4/new-proposed-regulations-for-half-time-of-the-fluctuating-work-week-method-of-overtime. Now we post another blog to describe some of the public comments filed in response to the proposed regulation.
Unlike the Part 541 salary basis regulations recently issued by DOL, which elicited thousands of substantive comments, this FLSA proposed regulation engendered very little public interest and few comments. DOL received a total of 38 comments, all of which they have posted at https://www.regulations.gov/docketBrowser?rpp=50&so=DESC&sb=postedDate&po=0&dct=PS&D=WHD-2019-0006.
Not surprisingly, managers and employers generally support this new regulation. For employers, the new regulation would enhance pay flexibility by allowing for bonus income which would not impact the salary basis of the worker’s compensation. This would increase the ability of employers to pay overtime usingr the FWW method, and thus potentially control their overtime compensation costs better. Managers and employers are for this new regulation since it would facilitate the expanded use of the FWW overtime pay method, which is only rarely employed by businesses. One set of detailed comments from employer interest came from a group of management lawyers who have dubbed themselves the Wage & Hour Defense Institute. These lawyers support the proposed regulation and seek additional changes and clarification of the use of the FWW method beyond those proposed by DOL. See https://www.regulations.gov/document?D=WHD-2019-0006-0014. The Institute hopes that this revision will allow employers more flexibility to create a competitive salary-plus compensation system to meet the new changes.
Abrahams Wolf-Rodda, LLC wrote in favor of the proposed regulation, saying that it would help better define who is eligible for the FWW half-time premiums. https://www.regulations.gov/document?D=WHD-2019-0006-0017. The Firm also urged DOL to go even further and clarify other ambiguities which have arisen from the use of the FWW in the situation with a failed exemption. Sometimes workers are correctly paid on a salary basis, but it turns out they don’t have exempt duties. Courts have split as to whether the FWW can used in the situation of a failed exemption to calculate back wages due. The majority rule says the FWW method can be used in this circumstance. Abrahams Wolf-Rodda, LLC sought some clarification from DOL which would defend the use of the FWW method for failed exemptions, since that is consistent with DOL’s own policy in conducting back wage investigations.
However, like many employment issues, there are two sides to the coin. Frequently, employees are baffled by the use of the FWW method and the payment of half-time overtime. Accordingly, it is not surprising that there were some employee-related comments opposing the proposed regulation and even the use of the FWW method of overtime. Some comments essentially want the existing FWW regulation to be revoked or revised. Most of these complaints are economic in nature, focusing in on how the FWW method results in less compensation than traditional time and one-half overtime pay. The thinking goes that this proposed regulation would require workers to labor for longer hours only to be paid ever less per hour in overtime premium pay. The main issue expressed by some of the public comments was the basic concern with allowing the FWW and half-time premiums in place of traditional overtime pay. Many of those comments are confused by the way the proposed rule was worded and are having difficulty with fully understanding what the ruling is about. There are also some concerns expressed with having to train employees to implement any new rules.
A representative from the Economic Policy Institute (“EPI”) wrote against the proposed regulation. https://www.regulations.gov/document?D=WHD-2019-0006-0028. They believe that this proposal would impede the efforts of workers who need additional work hours to supplement their paychecks. They are worried that this proposal would reduce the amount workers are paid, saying that employees who are switched to the FWW method are likely to receive lower income for their work than with the customary time and one-half payment method. According to the EPI, this would greatly affect salaried nonexempt workers in the retail, fast food, building maintenance, customer service, nursing, firefighting, and law enforcement industries, as well as any job where bonuses or premiums are given for extra hours of work. They concluded by saying that the allowance of additional payments under the FWW would go against the standard of requiring a fixed salary and would cause unstable, erratic payments of premium overtime to workers.
In short, like many employment law issues, when it comes to the FWW method, workers and employers see things from different perspectives.