The nature of jobs in some industries requires employees to work hours that vary each week. When salaried non-exempt employees in such industries work over 40 hours in any given week, the Fair Labor Standard Act permits employers to use the Chinese overtime method to calculate their overtime wages.
Chinese overtime, also known as half-time or the fluctuating workweek method, is a bit different from the traditional way of computing overtime pay. Unlike other employees who receive 1.5 times their regular hourly rate for overtime hours, employees with fluctuating workweek hours get paid at a rate of 0.5 for each extra hour.
Before we talk about the Chinese overtime formula, please note that there are strict criteria that an employee must meet to qualify for this method.
What Is The Chinese Overtime Formula? How Does It Work?
With Chinese overtime formula, an employer first divides your fixed weekly salary by the total number of hours worked each week to determine the standard base rate. Then, they pay half of the standard base rate for each additional hour.
We will give an example so that you can understand better how the Chinese overtime method works.
Fluctuating Workweek Overtime Calculation Example
Let’s assume you’re an employee with a fixed weekly salary of $1,000, which you must earn regardless of the hours worked. If you accumulate 50 hours in a week, your standard hourly rate would be $20 ($1,000/50). Your Chinese overtime pay rate would be one-half times $20, which is $10.
Since you worked for an additional 10 hours, you’ll receive $10 for every overtime hour ($10 x 10). That would be $100 as overtime pay, meaning you will take home a $1,100 paycheck.
Employee Eligibility Requirements for Chinese Overtime Method
In 2020, the Department of Labor (DOL) revised its regulation on fluctuating workweek under the Fair Labor Standards Act. The recently released updates simplified the subject of eligibility.
For workers to qualify for the Chinese overtime method, employers must meet these statutory and federal requirements:
1. Work hours need to vary from week to week.
2. Employees must earn a fixed salary that’s not subject to the number of hours worked in a workweek.
3. The hourly wage must always meet the minimum wage provisions.
4. The worker and employer should have a clear and mutual understanding that the workweek hours will not change the fixed salary.
While the Chinese overtime method is legal, it doesn’t apply to every employee. If an employer pays you half-time without meeting the above criteria, you can sue them for wage and overtime violations.
Other Possible Chinese Overtime Violations
· Employer averages hours worked over two weeks: Let’s assume you worked 20 hours in the first week and 60 hours in the second week. If an employer averages the hours over two weeks, then you will have zero overtime hours. That is unacceptable. You deserve to get paid for the extra 20 hours worked in the second week.
· Employer imposes unauthorized deductions: Some deductions from salaries are illegal under the state and federal law. For example, some employers can deduct money because you were absent from work due to illness or vacation. Others will dock pay for the unscheduled absences. Deductions for employee training or uniform are also illegal.
· Fixed salary is below the minimum wage: The employer must provide enough fixed salary that doesn’t fall below the minimum state or federal minimum wage limit in any given week.
Want to talk to an overtime lawyer today?
If you have a question or think an employer is cheating you out of your overtime wages, consult an overtime lawyer at The Hedgpeth Law Firm, PC. Call (281) 572-0727 to request a free case evaluation.
Travis Hedgpeth
Travis Hedgpeth is the sole-practitioner of The Hedgpeth Law Firm, PC located in Houston, TX.
