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work week

Employers trying to find alternatives to the traditional 9-to-5, 40 hour work week may want to consider a fluctuating work week schedule. A fluctuating work week schedule may lessen the financial burdens of personnel who are not exempt from overtime pay requirements. It may also increase productivity and enhance work/life balance, while meeting the operational needs of the office.

Administrative personnel and office workers are generally non-exempt employees, as defined by the Fair Labor Standards Act (“FLSA”), earning overtime at one and one-half times their regular rate of pay. The FLSA sets the standard work week at 40 hours. Employers are required to pay non-exempt employees no less than 1.5 times their regular rate of pay for hours worked in excess of 40 hours. However, there is an exception allowed to employers properly utilizing a fluctuating work week as an alternative method of satisfying the FLSA’s overtime pay requirement.

To take advantage of the fluctuating work week exception, specific conditions must be met. An employee employed on a salary basis may have hours of work which may change from week to week and the salary may be paid pursuant to an understanding with the employer that the employee will receive a fixed amount as straight time pay based upon the hours called upon to work in a particular work week.   Importantly, this arrangement must be previously agreed to by the employee. It cannot be claimed after the fact. It should be in writing and included in a written employee manual or policy. The amount of the salary must be sufficient to provide compensation to the employee at a rate not less than the applicable minimum wage rate for every hour worked in those work weeks in which the number of hours worked is the greatest. For overtime hours, the employee should receive additional compensation beyond the fixed salary at a rate not less than 1.5 times the regular rate of pay. Currently, minimum wage is set at $7.25 an hour.

For example, an office worker has a fixed weekly salary of $500.00 and works 55 hours in a single workweek. Under the fluctuating work week exception, the employer must divide the $500.00 fixed salary by the 55 hours worked to determine the regular hourly rate of pay for that work week, or $9.09 an hour. In this example, the office worker actually earned $9.09 an hour straight time rate for all the hours including the hours worked in excess of forty (40) hours. To comply with the fluctuating work week exception, the employer must also pay the employee the .50 time rate for all hours worked in excess of 40. In this example, the amount of overtime hours worked is 15. Note that the overtime rate is a “time and a half rate” and the employee in this example has already received the “time rate” and is now due the “half rate” for the overtime hours worked in excess of 40. So, the employer divides the $9.09 rate in half ($4.55 an hour) and then multiplies the half rate by the 15 overtime hours worked, or $68.25 ($4.55 an hour x 15 hours = $68.25). The employer then pays the employee an additional $68.25 gross wage for the 15 hours overtime worked in the work week for a total gross wage of $568.25.
It is important to always remember that that the regular rate of pay calculation can go all the way down to the minimum wage ($7.25), but no lower. Also, the additional half-time pay cannot be included as part of the fixed salary and must be paid for all hours in excess of 40 that are worked in any week.   Continuing with the example of a fixed salary of $500.00 a week, in order to qualify for the fluctuating work week exception, the most the employee can work in any particular week is 68 hours ($500.00 divided by $7.25 an hour = 68.96 hours). Care must be taken not to set the fixed salary and/or the number of hours which can be worked in a particular week to produce a regular rate below the federal minimum wage.

Proper use of the fluctuating work week exception may be a good way to provide a benefit to employees and reduce an employer’s risk of extensive overtime pay. Care has to be taken that all provisions of the fluctuating work week exception are followed and include written policies which evidence a clear understanding between the employer and employee that this method of compensation is being used. Finally, never allow the fixed pay rate and/or the weekly hours worked reduce the employee’s regular pay rate below the federal minimum wage.

Special thanks are due to Hugh Coleman for his contributions to this article

Scott Alagood is board certified in Residential and Commercial Real Estate Law by the Texas Board of Legal Specialization and can be reached at alagood@dentonlaw.com and www.dentonlaw.com.

 

Servicemember's Civil Relief Act     According to the U.S. Department of Defense records, through the end of 2012 there were approximately 1.4 million active duty U.S. military servicemembers deployed throughout the world and the U.S.  When you include the almost 2 million persons classified as dependents of such military personnel, there are approximately 3.4 million Americans who are directly affected by the military engagements in which the United States is and will be involved.  Additionally, civilian contractors play major roles in conflicts involving the U.S. military.

Beginning with the first Soldier’s and Sailor’s Civil Relief Act of 1918, the United States has attempted to address certain hardships imposed on persons who are suddenly drafted or deployed into military conflicts.  the most recent version of this attempt was codified at 50 U.S.C. App. Section 501-596 in 2003 (with changes effective in 2004), and also known as the Servicemember’s Civil Relief Act (the “Act”).  The Act specifically states that its purpose “is to provide for, strengthen, and expedite the national defense through protection … to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation, … and to provide for the temporary suspension of judicial and administrative proceedings and transactions that may adversely affect the civil rights of servicemembers during their military service.

The underpinnings of the Act try to balance the rights of the creditor and the servicemember by granting judicial discretion to delay the enforcement of remedies available to creditors or to allow the service member additional time to meet financial obligations.  Members of the Army, Navy, Air Force, Marine Corps, Coast Guard, and Reserves (who are ordered to report for military service) are covered by the Act.  Additionally, any U.S. citizen that serves with the armed forces of a nation that is allied with the U.S. in prosecuting a war or military action against a common enemy is also covered by the Act.  Dependents (servicemember’s spouse, child, or a person for whom the servicemember provides more than one-half of the person’s support for 180 days) may apply for the protections of the Act in situations involving evictions, installment sales and lease contracts, mortgages, and residential and motor vehicle leases.

As a general rule, the Act affords its protections when the servicemember enters active military service and ends once that service is over or the service member dies during active military service.  While an exhaustive list of the protection afforded by the Act cannot be set forth in this limited space, the following list represents the significant provisions of the Act which frequently come into play.

  • Default Judgments – Section 521
  • Prohibition of Fines and Penalties – Section 523
  • Stay of Execution of Judgments, Attachments and Garnishments – Section 524
  • Tolling of Statute of Limitations – Section 526
  • Maximum Rate of Interest Limited to 6% – Section 527
  • Evictions – Section 531
  • Installment Sales and Lease Contracts – Section 532
  • Mortgages and Deeds of Trust – Section 533
  • Termination of Residential or Motor Vehicle Leases – Section 535
  • Termination of Telephone Service Contracts – Section 535a
  • Enforcement of Storage Liens – Section 537
  • Taxes on Personal Property or Real Estate – Section 561
  • Deferral of Income Taxes – Section 570

The Act requires the Secretary of each armed service branch to ensure that all service members are aware of their rights under the Act.  Any questions about the Act can be directed to the appropriate Judge Advocate, Legal, or Family Member office associated with the particular branch of service.  The appropriate office may be located by googling U.S. Armed Forces Legal Assistance Legal Services Locator or http://legalassistance.law.af.mil./content/locator.php.  Interested parties may also want to check out the Military Sentinel website established by the Department of Defense and the Federal Trade Commission at http://www.ftc.gov/sentinel/military/  which advises service members and their families on consumer protections afforded military personnel.

Creditors may check the status of a debtor’s military status through the official SCRA website at https://www.dmdc.osd.mil/appi/scra/.  However, to receiver accurate military status, the creditor will need to enter the debtor’s birth date and last four digits of the debtor’s social security number.  If there is any questions whether or not a party  to any of the proceedings listed above may be in active military service or has only been recently discharged from such service (in some instances up to one year after discharge), it is extremely important that the provisions of the Act be reviewed prior to bringing an action for enforcement of the creditor’s rights.  In certain instances, fines or imprisonment can be imposed against a creditor who knowingly takes action against a protected service member in a manner not prescribed by the Act.

Scott Alagood is Board Certified in Commercial and Residential Real Estate Law and may be reached at alagood@dentonlaw.com and www.dentonlaw.com.

 

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