If an employee whose maximum hours standard is 40 hours was hired at
a salary of $200 for a fixed workweek of 40 hours, his regular rate at
the time of hiring was $5 per hour. If his workweek is later reduced to
a fixed workweek of 35 hours while his salary remains the same, it is
the fact that it now takes him only 35 hours to earn $200, so that he
earns his salary at the average rate of $5.71 per hour. His regular rate
thus becomes $5.71 per hour; it is no longer $5 an hour. Overtime pay is
due under the Act only for hours worked in excess of 40, not 35, but if
the understanding of the parties is that the salary of $200 now covers
35 hours of work and no more, the employee would be owed $5.71 per hour
under his employment contract for each hour worked between 35 and 40. He
would be owed not less than one and one-half times $5.71 ($8.57) per
hour, under the statute, for each hour worked in excess of 40 in the
workweek. In weeks in which no overtime is worked only the provisions of
section 6 of the Act, requiring the payment of not less than the
applicable minimum wage for each hour worked, apply so that the
employee's right to receive $5.71 per hour is enforceable only under his
contract. However, in overtime weeks the Administrator has the duty to
insure the payment of at least one and one-half times the employee's
regular rate of pay for hours worked in excess of 40 and this overtime
compensation cannot be said to have been paid until all straight time
compensation due the employee under the statute or his employment
contract has been paid. Thus if the employee works 41 hours in a
particular week, he is owed his salary for 35 hours--$200, 5 hours' pay
at $5.71 per hour for the 5 hours between 35 and 40--$28.55, and 1
hour's pay at $8.57 for the 1 hour in excess of 40--$8.57, or a total of
$237.12 for the week.
[46 FR 7316, Jan. 23, 1981]
