Reference is made in Sec. 4.180 to the rules prescribed by section 6
of the Act which permit exclusion of certain fringe benefits and
equivalents provided pursuant to section 2(a)(2) of the Act from the
regular or basic rate of pay when computing overtime compensation of a
service employee under the provisions of any other Federal law. As
provided in Sec. 4.177, not only those fringe benefits excludable under
section 6 as benefits determined and specified under section 2(a)(2),
but also equivalent fringe benefits and cash payments furnished in lieu
of the specified benefits may be excluded from the regular or basic rate
of such an employee. The application of this rule may be illustrated by
the following examples:
(a) The A company pays a service employee $4.50 an hour in cash
under a wage determination which requires a monetary rate of not less
than $4 and a fringe benefit contribution of 50 cents which would
qualify for exclusion from the regular rate under section 7(e) of the
Fair Labor Standards Act. The contractor pays the 50 cents in cash
because he made no contributions for fringe benefits specified in the
determination and the contract. Overtime compensation in this case would
be computed on a regular or basic rate of $4 an hour.
(b) The B company has for some time been paying $4.25 an hour to a
service employee as his basic cash wage plus 25 cents an hour as a
contribution to a welfare and pension plan, which contribution qualifies
for exclusion from the regular rate under the Fair Labor Standards Act.
For performance of work under a contract subject to the Act a monetary
rate of $4 and a fringe benefit contribution of 50 cents (also
qualifying for such exclusion) are specified because they are found to
be prevailing for such employees in the locality. The contractor may
credit the 25 cent welfare and pension contribution toward the discharge
of his fringe benefit obligation under the contract but must also make
an additional contribution of 25 cents for the specified or equivalent
fringe benefits or pay the employee an additional 25 cents in cash.
These contributions or equivalent payments may be excluded from the
employee's regular rate which remains $4.25, the rate agreed upon as the
basic cash wage.
(c) The C company has been paying $4 an hour as its basic cash wage
on which the firm has been computing overtime
compensation. For performance of work on a contract subject to the Act
the same rate of monetary wages and a fringe benefit contribution of 50
cents an hour (qualifying for exclusion from the regular rate under the
Fair Labor Standards Act) are specified in accordance with a
determination that these are the monetary wages and fringe benefits
prevailing for such employees in the locality. The contractor is
required to continue to pay at least $4 an hour in monetary wages and at
least this amount must be included in the employee's regular or basic
rate for overtime purposes under applicable Federal law. The fringe
benefit obligation under the contract would be discharged if 50 cents of
the contributions for fringe benefits were for the fringe benefits
specified in the contract or equivalent benefits as defined in
Sec. 4.177. The company may exclude such fringe benefit contributions
from the regular or basic rate of pay of the service employee in
computing overtime pay due.
