Fluctuating work week method is endorsed by 10th circuit

The U.S. Court of Appeals for the 10th Circuit endorsed the fluctuating workweek method of calculating back pay awards for misclassified salaried employees in lawsuits arising under the Fair Labor Standards Act. In Clements v. Serco, Inc., 2008 U.S. App. LEXIS 13806 (10th Cir. July 1, 2008).

The 10th Circuit held that the district court properly used the fluctuating workweek method to calculate a back pay award for unpaid overtime, rather than the alternative time-and-a-half formula...

According to FLSA, 29 C.F.R. § 778.114(a):

When the number of hours worked in a week moves around:

"the regular rate of the employee will vary from week to week and is determined by dividing the number of hours worked in the workweek into the amount of the salary to obtain the applicable rate for the week."

For instance consider a person earning $1,500 a week who was was misclassified as exempt from recieving overtime. Assume that the court has determined that the person generally works 50 hours a week. Since it has been determined that they are misclassified, they are entitled to 10 hours of OT.


Under the fluctuating workweek calculation, the value of the OT that the employee is entitled to is:

Regular rate = 1,500/50 = $30.00

so the OT owed would be = 0.5* $10hours * $30.00 = $150.00

In contrast, under the usual FLSA calculation, the person would recieve a rate of one-and-one-half times the regular rate. Under the usual calculation it would be:

Regular rate = 1,500/50 = $30.00

so the OT owed would be = 1.5*$10hours*$30.00=$450.00

The underlying idea is that when the fluctuating workweek applies, employees receive overtime compensation at a rate of one-half their regular rate for the week – – "because such hours have already been compensated at the straight time regular rate, under the salary arrangement." Therefore, applying the fluctuating workweek approach typically reduces the amount of overtime compensation to which an employee is entitled.

At the end of the day, the value of the unpaid overtime for the misclassified worker will be lower.