Most people are not familiar with the Fluctuating Work Week (FWW) method of overtime compensation, but as overtime lawsuits and investigations become more common, it is imperative to understand it. Non-exempt employees who receive a fixed salary for a varying amount of hours each week under a proper FWW system are only entitled to receive one-half, as opposed to one and one-half, times their regular rate of pay for their overtime hours. But if the FWW is not properly implemented, employers can still be liable for the full one and one-half times the regular rate. Thus, the difference between a proper and improper FWW system can mean a three-fold increase in damages and can turn on a number of points, e.g., if the employee actually receives a fixed salary or the presence or absence of a clear, mutual understanding between employer and employee.

The FWW has its origins in Overnight Motor Transp. Co. Inc. v. Missel, 316 U.S. 572, 580 (1942), where the U.S. Supreme Court held:

Where the employment contract is for a weekly wage with variable or fluctuating hours the same method of computation produces the regular rate for each week. As that rate is on an hourly basis, it is regular in the statutory sense, inasmuch as the rate per hour does not vary for the entire week, though week by week the regular rate varies with the number of hours worked.

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