Payments made by the employer to cover such expenses are not included in the employee's regular rate (if the amount of the reimbursement reasonably approximates the expense incurred). An employee works the following hours in a particular week: (b) In the example in paragraph (a) of this section the employee has actually worked a total of 48 hours and is owed under the contract a total of $305 for the week. Where a higher minimum wage than that set in the Fair Labor Standards Act is applicable to an employee by virtue of such other legislation, the regular rate of the employee, as the term is used in the Fair Labor Standards Act, cannot be lower than such applicable minimum, for the words regular rate at which he is employed as used in section 7 must be construed to mean the regular rate at which he is lawfully employed. Comments or questions about document content can not be answered by OFR staff. Therefore, the established rate cannot be his regular rate. 778.325 Effect on salary covering more than 40 hours' pay. An employees earnings may be That total is then divided by the total number of hours worked in the workweek to calculate the employee's regular hourly rate. The application of the principles in paragraph (a) of this section to call-back payments may be illustrated as follows: An employment agreement provides a minimum of 3 hours' pay at time and one-half for any employee called back to work outside his scheduled hours. Under such a plan, an employee who would ordinarily command an hourly rate of pay well in excess of the minimum for his work is assigned a low hourly rate (often the minimum) for the first hour (or the first 2 or 4 hours) of each day. According to the FLSA, employees fall into one of two groups: nonexempt and exempt employees. If the contribution is not made as provided in section 7(e)(4) or if the plan does not qualify as a bona fide benefit plan under that section, the contribution is treated the same as any bonus payment which is part of the regular rate of pay, and at the time the contribution is made the amount thereof must be apportioned back over the workweeks of the period during which it may be said to have accrued. In addition, a number of states have enacted minimum wage and overtime pay laws, some of which provide greater worker protections than those provided by the FLSA. 1263; Gen. Ord. Permissible methods of doing this are set forth in part 4 of this title, subpart B. (For a fuller discussion of computation on the average rate, see 778.111; on the rate applicable to the job, see 778.415 through 778.421; on the established rate, see 778.400.). Since the employee has already received straight time compensation for all hours worked in these weeks, only additional half-time pay is due for overtime hours. For a discussion of the method of allocating bonuses based on employment in a prior period to the workweeks covered by the bonus payment, see 778.209. (1) The typical situation is one in which an employee is entitled by contract to 8 hours' pay at his rate of $12 an hour for certain named holidays when no work is performed. Regular Rate for Employees Paid a Commission. For work in excess of 8 hours or after the task is completed (whichever occurs first) he is paid one and one-half times the established rate for each such hour worked. Effect of Failure To Count or Pay for Certain Working Hours. However, under the provisions of section 7(h) and 7(e)(5) of the Act, any payments at the premium rate for daily overtime hours within such period may be credited toward the overtime compensation due for overtime hours in excess of 80. (a) Overtime premiums are those defined by the statute. Relationship between amount guaranteed and range of hours employee may be expected to work. (c) The pay guaranteed must be for not more than 60 hours based on the rate so specified.. (See 778.415 for the alternative method of computing overtime pay on the applicable rate.) Where the employee is paid only by commissions, calculating overtime is simple. While the employees regular rate of pay for the week is more that 1.5 times minimum wage, they did not earn more than half of their total compensation from commissions. (a) Daily and weekly overtime standards. A guaranty of $290 in such a situation would not, obviously, be based on the rates specified in the contract.
How to Calculate Overtime Pay in California 778.326 Reduction of regular overtime workweek without reduction of take-home pay. In some cases an employee is hired on a salary basis with the understanding that his weekly salary is intended to cover the fixed schedule of hours (and no more) and that this fixed schedule provides for alternating workweeks of different fixed lengths. Where these requirements apply, the commissioned employee is considered a non-exempt employee; where the requirements do not, the employee is considered an exempt employee. An agreement not to compensate employees for certain nonovertime hours stands on no better footing since it would have the same effect of diminishing the employee's total overtime compensation. If you have questions for the Agency that issued the current document please contact the agency directly. (a) Earnings at hourly rate exclusively. The only sums which can be excluded as overtime premiums from this total before the regular rate is determined are the extra $2.50 payments for the extra hour on Thursday and Friday made because of work actually in excess of 8 hours. The law also provides for enforcement in the courts. Learn how to calculate overtime pay and about the elements that go into the overtime definition and formula, including the regular rate of pay, the fluctuating workweek method, and the DOL's overtime rule. The eCFR is displayed with paragraphs split and indented to follow (a) Piece rates and supplements generally. Choosing an item from The amount by which the specified number of hours' pay exceeds the compensation for hours actually worked is considered as a payment that is not made for hours worked. Nothing in the FLSA or the U.S. Department of Labors regulations prevents an employer from paying an employee at or above the minimum wage or at a higher overtime rate of pay. Our two overtime calculation examples from before now look like this: $9.72 x 5 = 48.60 extra half rate for overtime hours, $19.44 per hour x 40 hours = $777.60 for the first 40 hours, $29.16 x 5 = $145.80 total for the overtime hours. . In this case, the regular rate of pay in each of these weeks is $18.67 and $14.58, respectively, and the employee's total compensation would be calculated as follows: For the 37.5 hour week the employee is owed $700 (fixed salary of $600 plus $100 productivity bonus, with no overtime hours); and for the 48 hour week $758.32 (fixed salary of $600 plus $100 productivity bonus, and 8 hours of overtime at one-half times the regular rate of $14.58 for a total overtime payment of $58.32). An agreement that only the first 8 hours of work on any days or only the hours worked between certain fixed hours of the day or only the first 40 hours of any week will be counted as working time will clearly fail of its evasive purpose. Such a contract affords to the employee the security of a regular weekly income and benefits the employer by enabling him to anticipate and control in advance at least some part of his labor costs. But the regulation actually requires the time and a half to be applied to regular pay, not base rate only. result, it may not include the most recent changes applied to the CFR. The guaranty of pay must be based on the rate so specified, in the contract. Lets look at what the overtime pay calculation would look like in the example above if our employee makes $15/hour base plus $200 in commission for the week and works a 45-hour week. Find the sum of the weighted overtime total and the employee's base pay. With so many laws and rules emerging each year, its never a bad idea to step back and look at the big picture. To ensure proper classification, employers should begin with the assumption their commissioned employees are non-exempt, and then review the potential exemptions to determine whether they apply. 778.411 Sixty-hour limit on pay guaranteed by contract. It is section 7(e)(4) which governs the status for regular rate purposes of any contributions made by an employer pursuant to a plan for providing the described benefits. 778.222 Other payments similar to call-back pay. In no event may such deductions (or deductions of the type described in 778.304(a)(2)) reduce the earnings to an average below the applicable minimum wage or cut into any part of the overtime compensation due the employee. Gifts, Christmas and special occasion bonuses. The expenses for which reimbursement is made must in order to merit exclusion from the regular rate under this section, be expenses incurred by the employee on the employer's behalf or for his benefit or convenience. Because these work activities will occur at the start and conclusion of the employees workdays, they establish the bookends of a single continuous workday. It has no relation to regular absences such as regularly scheduled days of rest. If he worked 9 hours on the holiday and a total of 50 hours for the week, he would be owed, under his contract, $162 (9 $18) for the holiday work and $492 for the other 41 hours worked in the week, a total of $654. If it is not possible or practicable to allocate the commission among the workweeks of the period in proportion to the amount of commission actually earned or reasonably presumed to be earned each week, some other reasonable and equitable method must be adopted. If the provisions of such a contract are followed, if the nonovertime hours are compensated in full at the applicable regular rate in each week and overtime compensation is properly computed for hours in excess of 40 at time and one-half the rate applicable in the particular workweek, the overtime requirements of the Fair Labor Standards Act will be met. (b) The situation is different in degree but not in principle where employees who have been at a bona fide $6 rate usually working 50 hours and taking home $330 as total straight time and overtime pay for the week are, during occasional weeks, cut back to 42 hours. (d) One scheme to evade the full penalty of the Act was that of setting an arbitrary low hourly rate upon which overtime compensation at time and one-half would be computed for all hours worked in excess of the applicable maximum hours standard; coupled with this arrangement was a guarantee that if the employee's straight time and overtime compensation, based on this rate, fell short, in any week, of the compensation that would be due on a piece-rate basis of x cents per piece, the employee would be paid on the piece-rate basis instead. See 778.7. L. 106202, 114 Stat. 11, 1971]. The Wage and Hour Division is providing information on common issues employers and workers face when responding to COVID-19, including the effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act. 778.600 Veterans' subsistence allowances. This part 778 does not deal with the general coverage of the Act or various specific exemptions provided in the statute, under which certain employees within the general coverage of the wage and hours provisions are wholly or partially excluded from the protection of the Act's minimum-wage and overtime-pay requirements. Divide by the total number of hours. Also, the maximum biweekly or annual earnings limitations on title 5 premium pay do not apply to FLSA overtime pay. Thus, if his total hours of work in the workweek which are in excess of the daily maximum are 10, and his hours in excess of the weekly maximum are 8, overtime compensation is required for 10 hours, not 8. [33 FR 986, Jan. 26, 1968, as amended at 46 FR 7315, Jan. 23, 1981]. This expansive definition of compensable work has particular importance in fields that traditionally pay by commission. As stated in 778.105, the beginning of the workweek may be changed for an employee or for a group of employees if the change is intended to be permanent and is not designed to evade the overtime requirements of the Act. (c) Promised bonuses not excluded. This sum is then divided by the number of hours worked in the week for which such compensation was paid, to yield the pieceworker's regular rate for that week. 778.309 Fixed sum for constant amount of overtime. [46 FR 7312, Jan. 23, 1981, as amended at 85 FR 68774, Dec. 16, 2019]. Each of the 13 consecutive 24-hour periods following constitutes an additional workday of the 14-day period. Various Federal, State, and local laws require the payment of minimum hourly, daily or weekly wages different from the minimum set forth in the Fair Labor Standards Act, and the payment of overtime compensation computed on bases different from those set forth in the Fair Labor Standards Act. Conditions not dependent on the quality or quality of work include a reasonable waiting period for eligibility, the requirement to repay benefits as a remedy for employee misconduct, and limiting eligibility on the basis of geographic location or job position.
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