(a) Hours in excess of 8 per day or statutory weekly standard. Many
employment contracts provide for the payment of overtime compensation
for hours worked in excess of 8 per day or 40 per week. Under some
contracts such overtime compensation is fixed at one and one-half times
the base rate; under others the overtime rate may be greater or less
than one and one-half times the base rate. If the payment of such
contract overtime compensation is in fact contingent upon the employee's
having worked in excess of 8 hours in a day or in excess of the number
of hours in the workweek specified in section 7(a) of the Act as the
weekly maximum, the extra premium compensation paid for the excess hours
is excludable from the regular rate under section 7(e)(5) and may be
credited toward statutory overtime payments pursuant to section 7(h) of
the Act. In applying these rules to situations where it is the custom to
pay employees for hours during which no work is performed due to
vacation, holiday, illness, failure of the employer to provide
sufficient work, or other similar cause, as these terms are explained in
Secs. 778.216 to 778.224, it is permissible (but not required) to count
these hours as hours worked in determining the amount of overtime
premium pay, due for hours in excess of 8 per day or the applicable
maximum hours standard, which may be excluded from the regular rate and
credited toward the statutory overtime compensation.
(b) Hours in excess of normal or regular working hours. Similarly,
where the employee's normal or regular daily or weekly working hours are
greater or less than 8 hours and 40 hours respectively and his contract
provides for the payment of premium rates for work in excess of such
normal or regular hours
of work for the day or week (such as 7 in a day or 35 in a week) the
extra compensation provided by such premium rates, paid for excessive
hours, is a true overtime premium to be excluded from the regular rate
and it may be credited toward overtime compensation due under the Act.
(c) Premiums for excessive daily hours. If an employee whose maximum
hours standard is 40 hours is hired at the rate of $5.75 an hour and
receives, as overtime compensation under his contract, $6.25 per hour
for each hour actually worked in excess of 8 per day (or in excess of
his normal or regular daily working hours), his employer may exclude the
premium portion of the overtime rate from the employee's regular rate
and credit the total of the extra 50-cent payments thus made for daily
overtime hours against the overtime compensation which is due under the
statute for hours in excess of 40 in that workweek. If the same contract
further provided for the payment of $6.75 for hours in excess of 12 per
day, the extra $1 payments could likewise be credited toward overtime
compensation due under the Act. To qualify as overtime premiums under
section 7(e)(5), the daily overtime premium payments must be made for
hours in excess of 8 hours per day or the employee's normal or regular
working hours. If the normal workday is artificially divided into a
``straight time'' period to which one rate is assigned, followed by a
so-called ``overtime'' period for which a higher ``rate'' is specified,
the arrangement will be regarded as a device to contravene the statutory
purposes and the premiums will be considered part of the regular rate.
For a fuller discussion of this problem, see Sec. 778.501.
(d) Hours in excess of other statutory standard. Where payment at
premium rates for hours worked in excess of a specified daily or weekly
standard is made pursuant to the requirements of another applicable
statute, the extra compensation provided by such premium rates will be
regarded as a true overtime premium.
(e) Premium pay for sixth or seventh day worked. Under section
7(e)(6) and 7(h), extra premium compensation paid pursuant to contract
or statute for work on the sixth or seventh day worked in the workweek
is regarded in the same light as premiums paid for work in excess of the
applicable maximum hours standard or the employee's normal or regular
workweek.
[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7311, Jan. 23, 1981)
