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ARTICLE · 14 NOVEMBER 2016

"Including" Overtime: Don't Be Misled By USDOL's Example

Fisher Phillips LLP
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We have previously cautioned that (with one very limited exception) federal Fair Labor Standards Act regular-rate principles do not support paying a fixed salary that "includes" FLSA overtime premium...

United StatesEmployment and HR
John Thompson
John Thompson
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We have previously cautioned that (with one very limited exception) federal Fair Labor Standards Act regular-rate principles do not support paying a fixed salary that "includes" FLSA overtime premium for varying numbers of overtime hours worked up to some targeted worktime total. This is so even though an employer plans to pay more in FLSA overtime wages for overtime hours the employee works over such a threshold.

Poorly-drafted "guidance" offered by the U.S. Labor Department in connection with the coming exemption changes appears to be misguiding employers into thinking otherwise.

A Careless Muddle

Page 7 of USDOL's guidance says that an employer and employee may agree to a "fixed salary" for a workweek of more than 40 hours worked, and that this "salary" can "include" FLSA overtime compensation "under certain conditions". If the employee's "schedule" "changes in any way" for any workweek, "either by working more or fewer hours", the employer must "adjust"

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