Can the fluctuating workweek method ease overtime pain?

In a recent column, I asked readers to share views on the Labor Department's new overtime rule, which will make most workers earning less than $47,476 a year eligible for overtime pay, regardless of job duties, starting Dec. 1. One particularly vocal group: nonprofit managers.

Q: "Our staff is dedicated to our mission. ... Most of our salaried staff earn below the new threshold, and most work in excess of 40 hours for 10 to 12 weeks of the year. We cannot pay more."

"Do I make my workers all nonexempt and face decreased morale, passion and productivity? Do I reduce my workforce, putting two to three people out of work? Do I decrease our generous health benefits?"

"I suspect workers will end up receiving bigger checks during peak periods and much smaller checks during slow periods. I can't imagine anyone will like that."

A: The income threshold for overtime pay was long overdue for an adjustment - but having to catch up all at once is hitting employers, especially nonprofit groups, hard. How can cash-strapped employers comply with the law, retain flexibility for workers and stay solvent?

One overtime payment option worth investigating is the fluctuating workweek method, says David James, an employment lawyer with Minnesota firm Nilan Johnson Lewis. It's an imperfect solution to an imperfect rule, but it may help ease the pain of playing catch-up.

Here's how it works: The employer guarantees the employee a regular salary every week, even when the employee works less than 40 hours. When the employee exceeds 40 hours, the employer pays an overtime premium - but instead of time-and-a-half, the overtime premium is only half the employee's hourly rate.

James puts it in dollar terms: A worker is paid a salary of $500 per week. In a week when the salaried worker puts in 45 hours, the worker's hourly rate is $11.11 per hour. Half that hourly rate is $5.56 per hour, which means $27.80 for the five hours of overtime.

Pros: The fluctuating workweek method costs the employer one-third of what straight overtime would cost, and it allows employees more predictable paychecks and continued flexibility.

Cons: Calculating the variable overtime rates "places a significant burden" on payroll and accounting staff, says employment attorney Declan Leonard of Berenzweig Leonard. And, James says, figuring out a base salary acceptable to both parties can be tricky.

Finally, employees under this method must have "noticeable and consistent variations in weekly hours," says Leonard - both above and below 40 hours. And employers must ensure, preferably in writing, that employees fully understand the new compensation structure. "I realize it sounds self-serving," he says, "but in this case, employers really do need to work with counsel" when considering the fluctuating workweek method.

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Ask Karla Miller about your work dramas and traumas by emailing wpmagazine@washpost.com.