According to the Indiana Department of Labor, employers are required to pay employees at 1 ½ times their regular rate of pay when employees work more than forty hours during a work week. This "overtime compensation" has exceptions of course, but many non-employees argue that some companies are using loopholes to purposely avoid paying overtime hours.
In Pennsylvania for example, two recent federal cases have called into question the business practice of "fluctuating work weeks." Fluctuating work weeks are used by employers who want to potentially save money which has raised a few red flags among workers.
Complaints against employers have pointed out that though employees are being paid a weekly salary rate, overtime hours that are calculated into a week's "total hours worked" will decrease the rate at which a worker is paid overtime, thereby ultimately paying the employee less overall.
According to the two lawsuits, drivers for Frito-Lay and workers for Kraft Foods Global Inc., complained that after calculations, their salaries clearly violated state minimum wage laws. These cases were particularly difficult to sort out because technically, under federal law, fluctuating work weeks are legal though there are a few stipulations that employers must adhere to.
According to rules outlined by the CPR, there must be an understanding between employers and employees regarding how an employee will be paid and how fluctuating work weeks will affect their pay. Also, an employee must be paid a fixed salary regardless of hours worked but the base salary must be large enough to not dip below minimum wage after overtime hours are calculated.
Employment lawyers point out that the law surrounding fluctuating work weeks can be quite confusing for employees and advise anyone who feels that they are not being paid correctly to speak with a lawyer knowledgeable in this subject area.
Source: The Pittsburgh Post-Gazette, "Rulings go against employers using 'fluctuating' workweeks to cut overtime costs," Ann Belser, Oct. 8, 2012