(a) Section 7 requires that the employee receive compensation for
overtime hours at ``a rate of not less than one and one-half times the
regular rate at which he is employed.'' When overtime is worked by an
employee who receives the whole or part of his wage in facilities and it
becomes necessary to determine the portion of his wages represented by
facilities, all such facilities must be measured by the requirements of
section 3(m) and subpart B of this part. It is the Administrator's
opinion that deductions may be made, however, on the same basis in an
overtime workweek as in nonovertime workweeks (see Sec. 531.36), if
their purpose and effect are not to evade the overtime requirements of
the Act or other law, providing the amount deducted does not exceed the
amount which could be deducted if the employee had only worked the
maximum number of straight-time hours during the workweek. For example,
in a situation where $1.60 an hour is the applicable minimum wage, if an
employee is employed at a rate of $1.65 an hour (5 cents in excess of
the minimum wage) the maximum amount which may be deducted from his
wages in a 40-hour workweek for items such as tools, dynamite caps,
miners' lamps, or other articles which are not ``facilities'' within the
meaning of the Act, is 40 times 5 cents or $2 (see Sec. 531.36).
Deductions in excess of this amount for such articles are illegal in
overtime workweeks as well as in nonovertime workweeks. There is no
limit on the amount which may be deducted for ``board, lodging, or other
facilities'' in overtime workweeks (as in workweeks when no overtime is
worked), provided that these deductions are made only for the
``reasonable cost'' of the items furnished. When such items are
furnished at a profit, the amount of the profit (plus the full amount of
any deductions for articles which are not facilities) may not exceed $2
in the example heretofore used in this paragraph. These principles
assume a situation where bona fide deductions are made for particular
items in accordance with the agreement or understanding of the parties.
If the situation is solely one of refusal or failure to pay the full
amount of wages required by section 7, these principles have no
application. Deductions made only in overtime workweeks, or increases in
the prices charged for articles or services during overtime workweeks
will be scrutinized to determine whether they are manipulations to evade
the overtime requirements of the Act.
(b) Where deductions are made from the stipulated wage of an
employee, the regular rate of pay is arrived at on the basis of the
stipulated wage before any deductions have been made. Where board,
lodging, or other facilities are customarily furnished as addition to a
cash wage, the reasonable cost of the facilities to the employer must be
considered as part of the employee's regular rate of pay. See Walling v.
Alaska Pacific Consolidated Mining Co., 152 F. (2d) 812 (C.A. 9), cert.
denied, 327 U.S. 803. Thus, suppose an employee employed at a cash rate
of $2 an hour, whose maximum nonovertime workweek under section 7(a) of
the Act is 40
hours, works 44 hours during a particular workweek. If, in addition, he
is furnished board, lodging, or other facilities valued at $16, but
whose ``reasonable cost'' is $11, the $11 must be added to his cash
straight-time pay of $88 ($2 x 44 hours) in determining the regular
rate of pay on which his overtime compensation is to be calculated. The
regular rate then becomes $2.25 an hour (($88+$11=$99)/(44
hours)=$2.25 an hour). The employee is thus entitled to receive a total
of $103.50 for the week ((40 hours x $2.25=$90)+(4 hours x $3.37 \1/
2\ =$13.50)). In addition to the straight-time pay of $88 in cash and
$11 in facilities, extra compensation of $4.50 in cash for the 4
overtime hours must, therefore, be paid by the employer, to meet the
requirements of the Act.
Payments Made to Persons Other Than Employees
