52 | Massachusetts Wage & Hour Peculiarities, 2025 ed. © 2025 Seyfarth Shaw LLP 10. Calculation of the Regular Rate Using the Fixed Salary Method Under federal law,288 non-exempt employees may be paid a salary for a fixed (as opposed to a fluctuating) number of hours. Under this model, the salary covers the employee’s straight-time pay up to the specified number of hours, and the employer pays a separate half-time overtime premium for the hours between 40 and the specified number of hours (assuming the specified number of hours is greater than 40). Because the salary does not include straight-time for hours worked in excess of the specified number of hours, those hours must be compensated at one and one-half times the regular rate. As with the FWW method, the best practice is to have an employee sign a written agreement that describes the fixed salary method in clear and unambiguous terms prior to paying the employee pursuant to this method. The DOL provides the following example:289 “If an employee whose maximum hours standard is 40 hours was hired at a fixed salary of $275 for 55 hours of work, he was entitled to a statutory overtime premium for the 15 hours in excess of 40 at the rate of $2.50 per hour (half-time) in addition to his salary, and to statutory overtime pay of $7.50 per hour (time and one-half) for any hours worked in excess of 55.”290 The employee’s “regular rate in any overtime week of 55 hours or less is determined by dividing the salary by the number of hours worked to earn it in that particular week, and additional half-time, based on that rate, is due for each hour in excess of 40.”291 When an employee works fewer than the specified number of hours in a given week, the fixed salary method allows an employer to compute an employee’s pay for that week in one of three ways: Method 1: Add salary plus half-time OT premium (salary divided by the specified number of hours, then divided by 2) for each hour worked from hours 40 to the specified number of hours, then subtract the hourly rate (salary divided by specified number of hours) for each hour below (i.e., short of) the specified number of hours.292 specifically adopted the Belo plan method of calculating overtime, and no Massachusetts courts have yet addressed whether this method would be acceptable under the Massachusetts Minimum Fair Wage Law. 288 Massachusetts law is silent as to whether the fixed salary method is available under Massachusetts law. The applicable Massachusetts regulation, 454 C.M.R. § 27.03(3), explicitly approves the FWW method but does not address the fixed salary method. We recommend consulting with legal counsel to determine the availability of this method in Massachusetts. 289 Although this example is helpful, the salary would not be lawful in Massachusetts because it results in the employee being paid less than the minimum wage for each hour worked. 290 29 C.F.R. § 778.325. 291 Id. 292 See 29 C.F.R. 778.325 (“This assumes that when an employee works less than 50 hours in a particular week, deductions are made at a rate of $5.50 per hour for the hours not worked.”).
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