A way to pay overtime to salaried non-exempt employees whose hours change from week to week, and the conditions you must meet to use it.
The FWW method is used for salaried non-exempt employees whose hours vary week to week, sometimes below 40 and sometimes above. Examples might include some office coordinators, technicians or assistant managers who do not meet an exemption. The employer pays a predictable salary, and the employee receives overtime when hours exceed 40, but at a lower premium than under the standard method.
EZTime labor rule alerts flag overtime and missed rest periods before payroll.
Under the Department of Labor’s rules (29 CFR 778.114), the method generally requires that:
Since a 2020 rule, the DOL has stated that paying bonuses, premiums or other additional pay on top of the salary does not by itself prevent use of the method, as long as such payments are included in the regular rate. Deductions from the salary for short weeks generally break the arrangement, except in limited cases.
Each week, you calculate a new regular rate because hours change:
The salary already pays straight time for every hour, so only the half-time premium is added.
A fictional employee earns a fixed salary of $1,000 per week under a valid FWW arrangement.
| Week | Hours worked | Regular rate | Overtime premium | Total pay |
|---|---|---|---|---|
| Week 1 | 36 | $27.78 | $0.00 | $1,000.00 |
| Week 2 | 44 | $22.73 | 4 x $11.36 = $45.45 | $1,045.45 |
| Week 3 | 50 | $20.00 | 10 x $10.00 = $100.00 | $1,100.00 |
Under the standard method, if $1,000 were intended to pay for 40 hours, the regular rate would be $25 and 10 overtime hours would cost 10 x $37.50 = $375 on top of the salary. That difference is why the method is attractive to employers, and also why it is closely examined when challenged. Rounding is to the cent for readability.
Several states do not allow the fluctuating workweek method or limit it. California, for example, generally does not permit it, and other states have restricted it through regulation or court decisions. Before using the method, check the law in each state where your employees work. Where it is not allowed, use the standard overtime calculation described in our guide to the regular rate of pay.
If the method is found invalid, the employer may owe overtime under the standard calculation for past weeks, which can be a large amount.
The method can suit businesses where hours genuinely vary and both sides value a stable salary. But it is technical, it is restricted in some states, and employees sometimes see it as unfair because the overtime rate falls as hours rise. Many small businesses find it simpler to pay hourly with standard overtime, or to schedule so that overtime is rare. Discuss the options with a payroll professional or employment attorney before deciding.
Salaried non-exempt employees still need full time records: every workday’s hours and every week’s total. Without them, you cannot calculate the weekly regular rate. With EZTime, salaried non-exempt employees clock in and out like hourly staff, using the app, a kiosk or NFC, and managers see weekly totals and overtime as they build up. Approved hours export to payroll, where the FWW calculation is applied. See also exempt vs. non-exempt employees.
A way of paying overtime to salaried non-exempt employees, where the salary covers all hours and overtime is paid at half the weekly regular rate.
It is allowed under federal rules when all conditions are met. Some states, such as California, do not allow it.
Generally no. The salary must stay fixed regardless of hours, with only limited exceptions.
Under the DOL’s 2020 rule, yes, as long as they are included in the regular rate for overtime.
No. FWW employees are non-exempt and are owed overtime. Exempt employees are not owed overtime under federal law.
Yes. They are non-exempt, so you need daily and weekly hour records to calculate overtime.
EZTime’s labor rule alerts warn about weekly hour limits, short rest between shifts, overtime thresholds and employees who forgot to clock out.