Wage And Hour Alert! Nevada Labor Commissioner Approves Use Of Fluctuating Workweek Method For Determining Overtime Rate

Volume 16, Issue 13
July 10, 2017

The Nevada Labor Commissioner recently posted a December 2016 Advisory Opinion on its website approving the use of the fluctuating workweek method for determining compensation for certain nonexempt employees. The Labor Commissioner determined that Nevada law permits this method, which is well accepted under federal wage and hour law.

The fluctuating workweek method ("FWW") can be used for nonexempt employees who are paid a salary but whose hours fluctuate from week to week (as opposed to working 40 hours or some other fixed weekly hours). A federal regulation allows an employer and employee to agree that a fixed salary will be paid to such employee as straight time pay for whatever hours he is called upon to work in a workweek, whether few or many. However, the salary amount must not fall below the applicable minimum wage rate for every hour worked in those workweeks in which the number of hours worked is greatest. In addition, the employee must receive overtime compensation at a rate not less than one-half his regular rate of pay for all overtime hours worked. Since the salary in such a situation is intended to compensate the employee at straight time rates for whatever hours are worked in the workweek, 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 hourly rate for the week. Payment for overtime hours at one-half such rate in addition to the salary satisfies the overtime pay requirement because such hours have already been compensated at the straight time regular rate, under the salary arrangement.

Although Nevada law is silent on the fluctuating workweek method, the Nevada Labor Commissioner determined that the use of the fluctuating workweek method for calculating an employee's regular wage rate for purposes of overtime compensation under Nevada Revised Statute 608.018(2) is permissible. The Labor Commissioner concluded: "the Nevada Office of the Labor Commissioner approves the use of the FWW method to calculate the overtime rate of a nonexempt fixed-salary employee . . . . In addition, the Nevada Office of the Labor Commissioner approves the use of the FWW method to determine the overtime rate of a nonexempt fixed-salary employee that also receives commissions and/or bonuses as long as those commissions and/or bonuses are included in the weekly amount of pay when determining the employee's 'regular wage rate.'"

This determination by the Labor Commissioner is welcome news as it clarifies Nevada law and provides employers with consistency between these important state and federal laws. The use of the fluctuating workweek method has several conditions and can be complicated. We are available to assist you in determining whether this method is advisable for your nonexempt employees and how to ensure it is correctly implemented.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.