© 2025 Seyfarth Shaw LLP Massachusetts Wage & Hour Peculiarities, 2025 ed. | 51 applicable hourly rate for that week.285 The employee is then entitled to overtime compensation in the amount of one-half times the regular rate for all hours worked over forty hours per week (because the salary provides straight-time pay for all hours worked). Under a fluctuating workweek method, the more hours worked, the lower the regular rate and, thus, the overtime premium will be. Example 1: An employee is paid $1200 per week and works 50 hours. The employee’s regular rate is $24.00, which is calculated by dividing the $1200 weekly salary by the total number of hours worked ($1200 ÷ 50 = $24.00 per hour). The employee would be entitled to $120.00 of overtime pay (.5 x $24.00 x 10 overtime hours), or $12.00 per each hour of overtime. Example 2: An employee is paid $1200 per week and works 60 hours. The employee’s regular rate is $20.00, which is calculated by dividing the $1200 weekly salary by the total number of hours worked ($1200 ÷ 60 = $20.00 per hour). The employee would be entitled to $200.00 of overtime pay (.5 x $20.00 x 20 overtime hours), or $10.00 per each hour of overtime. The employer bears the burden of demonstrating the existence of a clear and mutual understanding regarding how overtime will be calculated. Hence, the best practice for an employer is to have the employee sign a written agreement that describes the fluctuating workweek method in clear and unambiguous terms prior to paying the employee pursuant to this method. However, at least some courts have held that the requisite “clear and mutual understanding” may be established in the absence of a written agreement by the employee’s acceptance of the same salary each week.286 In addition, the employer should be cognizant that this method of compensation is administratively complex and potentially burdensome. Given the complexities, the employer should seek the advice of legal counsel prior to implementing a fluctuating workweek method for overtime compensation.287 285 29 C.F.R. § 778.114. 286 Several circuit courts and the DOL have also approved use of the FWW as a method to calculate back wages in exempt status misclassification cases where the employee had a clear understanding that he or she would be paid a salary and would not receive overtime for hours over forty. See Ransom v. M. Patel Enters., Inc., 734 F.3d 377, 386 n.14 (5th Cir. 2013); Desmond v. PNGI Charles Town Gaming, 630 F.3d 351 (4th Cir. 2011); Urnikis-Negro v. Am. Family Prop. Servs., 616 F.3d 665, 671 (7th Cir. 2010); Clements v. Serco, 530 F.3d 1224, 1230-31 (10th Cir. 2008); Valerio v. Putnam Assocs., 173 F.3d 35 (1st Cir. 1999); Blackmon v. Brookshire Grocery Co., 835 F.2d 1135 (5th Cir. 1988); DOL Opinion Letter 2009-3 (Jan. 14, 2009). Other circuit courts have not addressed the issue, however, and some district courts have rejected the computation of back wages in misclassification cases based on the half-time (FWW or fixed salary) method. See, e.g., Costello v. Home Depot USA, Inc., 944 F. Supp. 2d 199, 202-08 (D. Conn. 2013); Hasan v. GPM Invs., LLC, 896 F. Supp. 2d 145 (D. Conn. 2012). 287 The FLSA contains provisions for an additional alternative method of calculating overtime—the Belo plan. Named after a U.S. Supreme Court decision involving the A.H. Belo Corporation, this plan is used when an employer wishes to assure a constant weekly salary to employees whose work has inherently irregular hours. See Walling v. A.H. Belo Corp., 316 U.S. 624 (1942). It is sanctioned by the FLSA and allows employers to compensate employees for overtime with a fixed wage where the nature of the work performed necessitates irregular hours of work and there are significant variations in weekly hours of work both above and below forty hours per week. See 29 C.F.R. §§ 778.400-778.414. Employers that use the Belo plan must pay a fixed, guaranteed weekly wage which consists of the employee’s regular rate plus a predetermined amount of overtime at the FLSA rate. Id. This method is very complex and its use is even more restrictive than the FWW method. The Massachusetts legislature has not
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