(a) Flat rate is not an overtime premium. The same reasoning applies
where employees are paid a flat rate for a special job performed during
overtime hours, without regard to the time actually consumed in
performance. (This situation should be distinguished from ``show-up''
and ``call-back'' pay situations discussed in Secs. 778.220 through
778.222 and from payment at a rate not less than one and one-half times
the applicable rate to pieceworkers for work performed during overtime
hours, as discussed in Secs. 778.415 through 778.421). The total amount
paid must be included in the regular rate; no part of the amount may be
credited toward statutory overtime compensation due.
(b) Application of rule illustrated. It may be helpful to give a
specific example illustrating the result of paying an employee on the
basis under discussion.
(1) An employment agreement calls for the payment of $5 per hour for
work during the hours established in good faith as the basic workday or
workweek; it provides for the payment of $7.50 per hour for work during
hours outside the basic workday or workweek. It further provides that
employees doing a special task outside the basic workday or workweek
shall receive 6 hours' pay at the rate of $7.50 per hour (a total
payment of $45) regardless of the time actually consumed in performance.
The applicable maximum hours standard is 40 hours in a workweek.
(2) Suppose an employee under such an agreement works the following
schedule:
------------------------------------------------------------------------
M T W T F S S
------------------------------------------------------------------------
Hours within basic workday......... 8 8 7 8 8 0 0
Pay under contract................. $40 $40 $35 $40 $40 0 0
Hours outside basic workday........ 2 2\1
\ 1 0 0 4 0
Pay under contract................. $15 $45 $7.50 0 0 $30 0
------------------------------------------------------------------------
\1\ Hours spent in the performance of special work.
(3) To determine the regular rate, the total compensation (except
statutory exclusions) must be divided by the total number of hours
worked. The only sums to be excluded in this situation are the extra
premiums provided by a premium rate (a rate per hour) for work outside
the basic workday and workweek, which qualify for exclusion under
section 7(e)(7) of the Act, as discussed in Sec. 778.204. The $15 paid
on Monday, the $7.50 paid on Wednesday and the $30 paid on Saturday are
paid pursuant to rates which qualify as premium rates under section
7(e)(7) of the Act. The total extra compensation (over the straight time
pay for these hours) provided by these premium rates is $17.50. The sum
of $17.50 should be subtracted from the total of $292.50 due the
employee under the employment agreement. No part of the $45 payment for
the special work performed on Tuesday qualifies for exclusion. The
remaining $275 must thus be divided by 48 hours to determine the regular
rate--$5.73 per hour. The employee is owed an additional one-half this
rate under the Act for each of 8 overtime hours worked--$22.92. The
extra compensation in the amount of $17.50 payable pursuant to contract
premium rates which qualify as overtime premiums may be credited toward
the $22.92 owed as statutory overtime premiums. No part of the $45
payment may be so credited. The employer must pay the employee an
additional $5.42 as statutory overtime pay--a total of $297.92 for the
week.
[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7315, Jan. 23, 1981]
