Seyfarth Synopsis: The U.S. Department of Labor’s Wage & Hour Division issued a proposed rule on the fluctuating workweek method of pay. The proposal continues a regulatory saga started in 2008, and clarifies that payments in addition to the fixed salary are compatible with the fluctuating workweek method of compensation, and, in most cases, must be included in the regular rate of pay.

Specifically, the proposed regulation would clarify that bonus payments, premium payments, and additional pay are consistent with using fluctuating workweek. The extra payments, unless they are excluded under FLSA section 7(e)(1)-(8), must be included in the calculation of the regular rate. This is similar to a Bush Administration proposal issued in 2008, which was not implemented when the rule was finalized by the Obama Administration in 2011.

WHD rejects a distinction that has been developing in the courts: whether the additional pay is “productivity-based” or “hours-based.” Under the proposal, additional pay of any kind on top of the fixed salary would be compatible with the fluctuating workweek method.

The proposal will appear in the November 5, 2019, Federal Register. Interested parties will have 30 days to comment.