Statutory Exclusions
Certain payments made by employers to their employees are
excluded from the regular rate calculation. These "statutory exclusions" are
listed in Section 7(e) of the FLSA
and are summarized here. The payment may only be excluded if it meets all of
the requirements listed in the regulations describing that type of payment. If
you have questions concerning whether particular payments may be excluded from
the regular rate calculation, contact your local
Wage and Hour Division office.
- Sums paid as gifts, such as payments in the nature of
gifts given during holidays or on other special occasions, or as a reward
for service. The amounts of the gifts or payments may not be measured by
or dependent on hours worked, production or efficiency. (29
CFR 778.212)
- Payments made for occasional periods when no work is
performed due to vacation, holiday, illness, failure of the employer to
provide sufficient work, or other similar cause.
- Reasonable payments for traveling expenses, or other expenses an employee incurs while furthering the employer’s
interests and that are properly reimbursable by the employer (such as laundering
uniforms or buying supplies or materials on behalf of the employer); and
other similar payments to an employee which are not made as compensation
for the employee’s hours of employment.
- Sums paid in recognition of services performed during a
given period if one of the following three conditions is met:
- both the
fact that payment is to be made and the amount of the payment are at the
sole discretion of the employer at or near the end of the period and not
according to any prior contract, agreement, or promise causing an employee
to expect such payments regularly; or
- the payments are made pursuant
to a bona fide profit-sharing plan or trust or bona fide thrift savings
plan, which meet additional requirements set forth in the regulations; or
- the payments are talent fees (as defined in the regulations) paid to performers, including announcers on radio and television programs.
- Contributions irrevocably made by an employer to a trustee
or third person according to a bona fide plan for providing old-age,
retirement, life, accident, or health insurance or similar benefits to
employees. (29
CFR 778.214, 29
CFR 778.215)
- Extra compensation paid at a “premium rate” for certain
hours worked by an employee because such hours are hours worked in excess
of eight in a day, or in excess of 40 hours in the week, or in excess of
the employee’s normal working hours or regular working hours, as the case
may be. Such extra compensation may be creditable toward overtime
compensation. (29
CFR 778.202)
- Extra compensation provided by a “premium rate” for work
by the employee on Saturdays, Sundays, holidays, or regular days of rest,
or on the sixth or seventh day of the workweek. The premium rate may not
be less than one and one-half times the rate established in good faith for
work performed in nonovertime hours on other days. Such extra
compensation may be creditable toward overtime compensation. (29
CFR 778.203, 29
CFR 778.205)
- Extra compensation provided by a “premium rate” under an
applicable employment contract or collective bargaining agreement for work
outside of the hours established in good faith by the contract or agreement as the basic, normal, or regular workday (not exceeding
eight hours) or workweek (not exceeding 40 hours). The premium rate may
not be less than one and one-half times the rate established in good faith
by the contract or agreement for like work performed during the workday or
workweek. Such extra compensation may be creditable toward overtime
compensation. (29
CFR 778.204, 29
CFR 778.206)
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