LegiStorm

Summary:
Highlights

GAO reviewed the Department of Labor, Wage and Hour Division's (the Department) new rule on the Fluctuating Workweek Method of Computing Overtime. GAO found that the final rule (1) revises the regulations for computing overtime compensation of salaried nonexempt employees who work hours that vary each week (fluctuating workweek) under the Fair Labor Standards Act, as amended, Act of June 25, 1938; (2) clarifies that payments, in addition to the fixed salary, are compatible with the use of the fluctuating workweek method of compensation and that such payments must be included in the calculation of the regular rate as appropriate; and (3) adds examples and makes minor revisions to make the rule easier to understand.







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B-332266
June 23, 2020
The Honorable Lamar Alexander
Chairman
The Honorable Patty Murray
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
The Honorable Robert C. ?Bobby? Scott
Chairman
The Honorable Virginia Foxx
Ranking Member
Committee on Education and Labor
House of Representatives
Subject: Department of Labor, Wage
and Hour Division: Fluctuating Workweek Method of Computing Overtime
Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a
major rule promulgated by the Department of Labor, Wage and Hour Division (the Department)
entitled ?Fluctuating Workweek Method of Computing Overtime? (RIN: 1235-AA31).  We
received the rule on June 8, 2020.  It was published in the Federal Register as
a final rule on June 8, 2020.  85 Fed. Reg. 34970.  The effective date of the
rule is August 7, 2020.
According to the Department, the final rule revises the regulations for computing
overtime compensation of salaried nonexempt employees who work hours that vary each week
(fluctuating workweek) under the Fair Labor Standards Act, as amended, Act of June 25,
1938, ch. 676, 52 Stat. 1060, classified at 29 U.S.C. §§ 201?219.  The
Department stated the final rule clarifies that payments, in addition to the fixed salary,
are compatible with the use of the fluctuating workweek method of compensation and that
such payments must be included in the calculation of the regular rate as appropriate.
 According to the Department, the final rule also adds examples and makes minor
revisions to make the rule easier to understand.
The Congressional Review Act (CRA) requires a 60-day delay in the effective date
of a major rule from the date of publication in the Federal Register or receipt of
the rule by Congress, whichever is later.  5 U.S.C. § 801(a)(3)(A).  The final
rule was published on June 8, 2020.  85 Fed. Reg. 34610.  However,
the Congressional Record does not indicate that either House of Congress
received the rule.  The agency indicated to us the rule was delivered on June
9, 2020.  Email from Wage and Hour Division, Department of Labor, to GAO. 
The rule has a stated effective date of August 7, 2020.  Therefore,
the final rule does not have the required 60-day delay in effective date.
Enclosed is our assessment of the Department?s compliance with the procedural steps
required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. 
If you have any questions about this report or wish to contact GAO officials responsible
for the evaluation work relating to the subject matter of the rule, please contact Shari
Brewster, Assistant General Counsel, at (202) 512-6398.

Shirley A. Jones
Managing Associate General Counsel
Enclosure
cc: Robert Waterman
Compliance Specialist
Wage and Hour Division
Department of LaborENCLOSURE
REPORT UNDER 5 U.S.C. § 801(a)(2)(A) ON A
MAJOR RULE
ISSUED BY THE
DEPARTMENT OF LABOR,
WAGE AND HOUR DIVISION
ENTITLED
?FLUCTUATING WORKWEEK METHOD OF
COMPUTING OVERTIME?
(RIN: 1235-AA31)
(i) Cost-benefit analysis
The Department of Labor (Department) estimated the final rule will impose a one-time
rule familiarization cost of $32,828,582.  The Department further estimated the rule
would lead to annual costs of $3.7 million at the 3 percent discount rate and $4.4 million
at the 7 percent discount rate over the next 10 years.
The Department also stated it believes the final rule could reduce avoidable
disputes and litigation regarding the compatibility between supplemental pay and the
fluctuating workweek method.  The Department further stated it believes that the final
rule will allow employers and employees to better utilize flexible work
schedules.
The Department also stated the final rule may cause transfer payments to flow from
some employers to their employees and also may cause transfer payments to flow from
employees to some employers; however, the incidence, magnitude, and ultimate beneficiaries
of such transfers is unknown.
(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA), 5 U.S.C. §§
603-605, 607, and 609
The Department certified the final rule will not have a significant economic impact on a
substantial number of small entities.
(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act
of 1995, 2 U.S.C. §§ 1532-1535
While this rulemaking would affect employers in the private sector, the Department
stated the final rule is not expected to result in expenditures greater than $100 million
in any one year.
(iv) Other relevant information or requirements under acts and executive
orders
Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.
On November 5, 2019, the Department published a proposed rule.  84 Fed. Reg.
59590.  The Department received approximately 36 comments from individual
employees, employer and industry associations, employee advocacy groups, non-profit
organizations, law firms, professional associations, and other interested members of the
public.  The Department addressed the comments in the final
rule.Paperwork Reduction Act (PRA), 44 U.S.C. §§ 3501-3520
The Department determined the final rule does not require a collection of
information subject to approval by the Office of Management and Budget (OMB) under the Act,
or affect any existing collections of information.
Statutory authorization for the rule
The Department promulgated the final rule pursuant to sections 201 et seq. of
title 29, United States Code.
Executive Order No. 12,866 (Regulatory Planning and Review)
The Department stated the final rule is economically significant and that it was
reviewed by OMB.
Executive Order No. 13,132 (Federalism)
The Department determined the final rule would have no federalism implications. 
According to the Department, the final rule will not have substantial direct effects
on the states, on the relationship between the national government and the states, or on
the distribution of power and responsibilities among the various levels of
government.




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