The floating workweek, designed to protect employees from receiving less than normal wages, has changed to benefit employers. The complex rules require careful control of employee hours to avoid violating minimum wage laws, and legal advice is recommended. Employers are using the model to hire fewer employees to save money on overtime pay.
The floating work week is a definition of the Wage and Hour Acts as defined by the US Department of Labor (DOL). Although the principle behind the floating workweek was designed to protect employees from receiving less than normal wages when the US Fair Labor Standards Act (FLSA) was passed in 1939, as of 2011, changes in the way how the floating workweek are set to most directly benefit employers. This allows employers to avoid overpaying employees for overtime by structuring their wages as wages rather than hourly wages. As of 2011, the law was also updated to prohibit employers from paying bonuses and other types of wage premiums to employees hired under the floating workweek model, which reversed the 2008 decision in the law that allowed these types of payments additional ones were made.
While the floating workweek pattern is considered a valuable method of reducing administrative costs in payroll practices for employers, the rules themselves have been frequently changed and updated over the years and are very complex. Companies considering using the practice are advised to obtain legal advice before doing so, as several points of law can lead to areas of conflict between the employee and the employer in these cases. Among the key rules to consider are the actual amount of hours an employee works during each week must actually vary, and the employee must be paid a wage rather than an hourly wage.
One of the weaknesses of the floating workweek model for an employer is that employee hours must be carefully controlled to avoid violating minimum wage laws. A plan employee receives a fixed salary regardless of the hours worked in a week. If an employee works 40 hours in a week and is paid $400 USD (USD), that equates to $10 an hour. If, however, the employee worked 60 hours the following week and received the same wage of $400, the hourly wage would only be $6.66 per hour, which could violate minimum wage laws. Although the employee receives an additional 50% of his or her wages for overtime for those 20 extra hours of work, the floating model of the workweek would still violate labor laws if the minimum wage were set at $7 per hour.
The floating work week does not need to be documented in writing when an employee is hired; therefore, this can also lead to conflicts if wages change from one week to the next when split hourly. The occupations where this is most confusing can be those where the hours often vary widely, such as in fire and emergency medical services or with seasonal workers who are in high demand when the weather is good and less in demand when the weather is bad. . The reason an employee may feel cheated in these circumstances is that overtime pay can be sizable when work weeks are long and completely absent when they are not, which significantly varies the overall hourly rate they are paid.
One of the principles behind the FLSA model was to encourage employers to hire more employees using the floating work week so that they could save money on overtime pay when employees were not needed as much. As of 2011, however, the reverse has become the rule, with employers using the model to hire fewer employees. This is because it is more cost-effective to pay some employees overtime and grant excessive hours during busy times than to go through the bill expenses that accompany hiring new employees. The benefits that new hires are routinely offered often exceed their base rate, including health insurance and vacation costs. Other costs to an employer discourage them from hiring new people, such as increased administrative tasks and unemployment insurance payments, so the floating workweek method has come to be used as a way to minimize new hires from 2011.
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