Employees in some industries must put in a variety of hours each week due to the nature of their jobs. When salaried non-exempt employees in such industries work over 40 hours in any given week, the Employers are allowed to determine their overtime pay using the Chinese overtime method under the Fair Labor Standard Act.
So What is Chinese overtime? Chinese overtime, also known as the fluctuating workweek, is a method of paying overtime to an employee when they work more than 40 hours per week without eliminating all of the advantages of having them be an “exempt employee.”Employers pay wages for all hours worked during the course of the week when calculating overtime in China.
Continue asking if you want to gain more knowledge of Chinese over time.
What Is Chinese Overtime?
Chinese overtime, also known as a variable workweek or half-time method of overtime calculation, uses the fluctuating workweek method to compute overtime as allowed by the federal Fair Labor Standards Act. Employers employ this technique to cut costs. Although it is legal to use this method, some employers determine the pay in the wrong way. The employment law attorneys at Swartz Swidler may be able to help you if your employer employs this strategy and has underpaid you for your overtime hours.
It is simplest to use an example to comprehend the Chinese overtime calculation that is utilized in the fluctuating workweek method. A worker who earns a $900 weekly salary and puts in 60 hours per week has a standard base pay of $15 per hour, which is arrived at by dividing $900 by 60. The half-time premium is one-half of $15, or $7.5 because the employee worked 20 hours more per week than the standard 40. The employee will also receive $150 in overtime pay in addition to his $900 salary, or $7.5 times 20 hours.
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How Does Chinese Overtime Work?
Some employers may be able to pay some employees significantly less than what is typically required for overtime pay under the FLSA. Employees are typically entitled to overtime pay at the rate of one-and-a-half their “regular rate” for hours worked in excess of the required 40 per week. Workers who make “Chinese overtime,” on the other hand, are paid at one-half their regular rate.
Employers must adhere to 5 requirements in order for Chinese overtime to be legal. Here’s how to determine whether you’re being paid legally for “Chinese overtime”:
1. You Work A “fluctuating Workweek”
The term “fluctuating workweek” refers to one that is variable. The number of hours actually worked has changed if an employee works 40 hours one week and 20 hours the following.
That doesn’t necessarily imply that your work schedule is erratic. Several federal courts have found that employees who work variable hours on a regular schedule can be legally paid the “Chinese overtime pay is half of the average hourly wage.
The federal government may recognize a valid fluctuating workweek schedule for an employee who is always scheduled to work 32 hours on the first and third weeks of a month and 46 hours on the second and fourth weeks.
2. No Matter Your Hours, You Make A Fixed Salary
However, in order for Chinese overtime to be acceptable under the FLSA, employees must receive a set weekly salary, regardless of how many hours they actually put in.
Miguel receives a weekly fixed salary of $320. He has 28 hours of work scheduled for one week, for which he will be paid $320. Miguel works 36 hours the following week and is paid another $320. Miguel would still earn $320 even in the unlikely scenario that he was only required for 2 hours each week.
Miguel has a “fluctuating workweek,” as the FLSA is defined; he is required to work a variety of hours each week but is still paid a fixed salary.
3. You Make At Least Minimum Wage
The hourly pay for employees with variable workweeks varies according to the number of hours they put in. But in any case, that hourly rate must be at least the local minimum wage.
This circumstance applies to Miguel:
Miguel puts in the first-week salary of $320 while working 28 hours. His hourly rate for that week came to about $11.43, which is significantly more than the federal minimum wage of $7.25 for each hour worked. The following week, Miguel puts in more time: 36 hours. His hourly wage of $8.89 is still above the minimum, though.
If you work more than 40 hours per week, your hourly wage must continue to be higher than the applicable federal or state minimum wage. We’ll see in a moment how this demand could land Miguel’s employer in hot water.
4. You Have A Mutual Understanding With Your Employer
As an employee, your employer has to inform you that:
- Your fixed salary applies to all weeks, no matter how many hours you work
- You’ll receive overtime pay at one-half your regular per hour rate for the week you worked more than 40 hours
An employee typically only needs to be informed about this agreement; they don’t need to agree to it.
5. You Make Overtime At Half Your Regular Rate
If conditions 1 through 4 is met, your employer is allowed to give you the “Chinese overtime wage” of 50 percent of your regular rate for additional hours worked.
Again, though, depending on how many hours you actually worked in a week, this lower overtime wage could become illegal very quickly. Let’s examine Miguel’s situation over the course of two distinct weeks during which he worked:
Miguel has a right to compensation for the overtime hours because he is a nonexempt worker. He has a legitimate fluctuating workweek, as we’ve seen. He works 43 hours in one week.
But in order to determine whether his employer is permitted to pay him half of his regular rate, we must first establish that the regular rate is at least the minimum wage. Miguel’s hourly wage for that week just ekes by because $320 divided by 43 equals $7.44.
What Are Requirements For Legal Chinese Overtime?
- Employers must adhere to the following rules when calculating overtime using the fluctuating workweek method:
- The employees’ hours must change from week to week;
- The employees’ base salaries must not change according to the hours that they work;
- The base salaries must be at least the minimum wage for all weeks; and
- Both employers and employees need to be aware that base salary amounts will be paid regardless of the number of hours worked by each party.
- Possible violations and illegal use of Chinese overtime
Employers can misuse the fluctuating workweek method in a number of ways, infringing on both state and federal labor laws. For workers whose hours don’t change on a weekly basis, some employers employ this strategy. Others who pay base salaries that are too low do so in violation of the minimum wage law. When employees work fewer than 40 hours per week, some employers break the law by failing to pay them the standard wage. Because employees under the fluctuating workweek method would not be paid a fixed salary, shift differentials and other extra compensation may not be offered.
The employment law attorneys at Swartz Swidler may be able to assist you if your employer calculated your overtime pay in violation of the law. It’s possible that you’ll receive both the money you’re owed and additional fines if your employer is compelled to do so.
How To Calculate Chinese Overtime?
Miguel is due $320 plus $11.16, or half his hourly rate ($3.72) times three hours, for a total of $331.16.
Let’s see what happens when Miguel works even harder:
Miguel puts in 46 hours of work each week. We divide $320 by 46 to get his regular hourly rate, which comes out to $6.95. Due to the fact that this is less than the $7.25 FLSA minimum wage, his employer is unable to pay him “half-time” for the additional 6 hours worked.
Instead, Miguel must receive overtime pay from his employer at the standard FLSA rate: “time-and-a-half.”
Miguel is entitled to $382.55, which is made up of his $320 base salary plus the additional $62.55, or 1.5 times his regular hourly rate of $6.95.
The important thing to remember in this situation is that your regular rate must adjust weekly based on the number of hours you worked. Your right to receive full overtime pay arises if that regular rate falls below the minimum wage.
Other Potential Chinese Overtime Violations
Employer averages hours worked over two weeks: Suppose you put in 20 hours the first week and 60 the following. You won’t have worked any overtime if your employer averages the hours over a period of two weeks. You should be compensated for the additional 20 hours worked during the second week; that is unacceptable.
Employer imposes unauthorized deductions: Some salary deductions are prohibited by both state and federal law. Some employers, for instance, have the right to deduct money from your pay if you missed work because of an illness or vacation. For unplanned absences, some people will lose pay. It’s also unlawful to deduct money for uniforms or training expenses for employees.
Fixed salary is below the minimum wage: A sufficient fixed salary must be offered by the employer so that it never falls below the weekly minimum wage set by the state or the federal government.
Are You Retaining Your Earned Income?
It takes a lot of effort to keep a legitimate “Chinese overtime” system running. For starters, employers must determine each salaried worker’s fluctuating hourly rate each week.
In our experience, the majority of businesses fail at this. When they do, civil lawsuits may be the only option if workers aren’t receiving fair compensation.
Contact the attorneys at WageAdvocates.com to learn more about how much you should really be making in overtime pay.
The Bottom Line
Chinese overtime also referred to as the fluctuating workweek method enables an employer to pay an overtime rate equal to half the employee’s regular rate for all hours over 40 in a workweek.
The employee’s hours must vary from week to week in order to be in compliance with the FLSA and be eligible for “Chinese Overtime.” Additionally, the rate of pay used to determine the employee’s half-time overtime rate cannot be less than the federal minimum wage, and both the employer and the employee must be aware that the salary will cover all hours worked in a workweek, even if only a small amount of time it worked.
If you have any questions, please comment below.
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