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Fluctuating Work Week

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My position in the finance field was just reclassified from exempt to non-exempt. The company will pay back wages for overtime  during the past 2 years. However, they are only paying it at .5 of the hourly rate. My hours do not fluctuate like a seasonal employee as I work at least 40 hours each week. My question is, does the fluctuating work week apply to being reclassed and on back wages as opposed to my hours going forward? They want me to sign a letter stating the back wages I am going to be paid are final and I release claims to any other back wages. I feel like my prior wages should not qualify under this plan for only .5 rate but instead full rate or time-and-a-half as I had no knowledge of  being paid on a “fluctuating work week.” My hours do not fluctuate as I am required to be here Mon-Fri in a regular “9-5″ type of a job.

From your description, the tactic that the company is attempting is probably not legal.

In a few states, such as Missouri, the fluctuating work week is always illegal. It is, however, legal in most states and under federal law – with several important conditions.

The fluctuating work week is only legal when an employee clearly understands – in advance – that he or she is being paid through this method. Normally, that means that the employee signs a contract prior to being hired, that specifies that the fluctuating work week or “Belo plan” will be used. So, the past overtime should be paid at 1.5 times the usual hourly rate.

You are also correct in the assumption that the fluctuating work week is only valid when a worker’s hours vary above and below 40 hours per week. An employee who always works at least 40 hours per week cannot legally be paid by the fluctuating work week method, under regulations established by the U.S. Department of Labor Wage and Hour Division.

In fact, under the fluctuating work week, employees are entitled to their base salary for the entire week even if they work only 1 hour during the week. (Under this plan, employees are paid .5 times their average hourly rate for the week, rather than the usual time-and-one-half.)

In general, it’s not legal for workers to “sign away” their rights to past overtime. Usually, this is a violation of the Fair Labor Standards Act of 1938, and of any state overtime laws. By raising this issue, the employer is tacitly admitting that the employee is entitled to past overtime. (Even if the employee has already signed the agreement that retroactively gives up rights to overtime, it’s probably not legal or enforceable.)

The best advice in this case would be for the employee to file a complaint with the U.S. Department of Labor’s Wage and Hour Division, which enforces overtime law. The Wage and Hour contact number is 877-889-5627   They will investigate the claim and file suit if necessary to ensure that all workers at the company are paid any overtime that is due them. It is illegal for a company to retaliate against a worker who files such a complaint.