(a) Sums payable whether employee works or not. As explained in
Sec. 778.218, certain payments made to an employee for periods during
which he performs no work because of a holiday or vacation are not
required to be included in the regular rate because they are not
regarded as compensation for working. Suppose an employee who is
entitled to such a paid idle holiday or paid vacation foregoes his
holiday or vacation and performs work for the employer on the holiday or
during the vacation period. If, under the terms of his employment, he is
entitled to a certain sum as holiday or vacation pay, whether he works
or not, and receives pay at his customary rate (or higher) in addition
for each hour that he works on the holiday or vacation day, the certain
sum allocable to holiday or vacation pay is still to be excluded from
the regular rate. It is still not regarded as compensation for hours of
work if he is otherwise compensated at his customary rate (or at a
higher rate) for his work on such days. Since it is not compensation for
work it may not be credited toward overtime compensation due under the
Act. Two examples in which the maximum hours standard is 40 hours may
serve to illustrate this principle:
(1) An employee whose rate of pay is $5 an hour and who usually
works a 6-day 48-hour week is entitled, under his employment contract,
to a week's paid vacation in the amount of his usual straight-time
earnings--$240. He foregoes his vacation and works 50 hours in the week
in question. He is owed $250 as his total straight-time earnings for the
week, and $240 in addition as his vacation pay. Under the statute he is
owed an additional $25 as overtime premium (additional half-time) for
the 10 hours in excess of 40. His regular rate of $5 per hour has not
been increased by virtue of the payment of $240 vacation pay, but no
part of the $240 may be offset against the statutory overtime
compensation which is due. (Nothing in this example is intended to imply
that the employee has a statutory right to $240 or any other sum as
vacation pay.
This is a matter of private contract between the parties who may agree
that vacation pay will be measured by straight-time earnings for any
agreed number of hours or days, or by total normal or expected take-home
pay for the period or that no vacation pay at all will be paid. The
example merely illustrates the proper method of computing overtime for
an employee whose employment contract provides $240 vacation pay.)
(2) An employee who is entitled under his employment contract to 8
hours' pay at his rate of $5 an hour for the Christmas holiday, foregoes
his holiday and works 9 hours on that day. During the entire week he
works a total of 50 hours. He is paid under his contract, $250 as
straight-time compensation for 50 hours plus $40 as idle holiday pay. He
is owed, under the statute, an additional $25 as overtime premium
(additional half-time) for the 10 hours in excess of 40. His regular
rate of $5 per hour has not been increased by virtue of the holiday pay
but no part of the $40 holiday pay may be credited toward statutory
overtime compensation due.
(b) Premiums for holiday work distinguished. The example in
paragraph (a)(2) of this section should be distinguished from a
situation in which an employee is entitled to idle holiday pay under the
employment agreement only when he is actually idle on the holiday, and
who, if he foregoes his holiday also, under his contract, foregoes his
idle holiday pay.
(1) The typical situation is one in which an employee is entitled by
contract to 8 hours' pay at his rate of $5 an hour for certain named
holidays when no work is performed. If, however, he is required to work
on such days, he does not receive his idle holiday pay. Instead he
receives a premium rate of $7.50 (time and one-half) for each hour
worked on the holiday. If he worked 9 hours on the holiday and a total
of 50 hours for the week, he would be owed, under his contract, $67.50
(9 x $7.50) for the holiday work and $205 for the other 41 hours worked
in the week, a total of $272.50. Under the statute (which does not
require premium pay for a holiday) he is owed $275 for a workweek of 50
hours at a rate of $5 an hour. Since the holiday premium is one and one-
half times the established rate for nonholiday work, it does not
increase the regular rate because it qualifies as an overtime premium
under section 7(e)(6), and the employer may credit it toward statutory
overtime compensation due and need pay the employee only the additional
sum of $2.50 to meet the statutory requirements. (For a discussion of
holiday premiums see Sec. 778.203.)
(2) If all other conditions remained the same but the contract
called for the payment of $10 (double time) for each hour worked on the
holiday, the employee would receive, under his contract $90 (9 x $10)
for the holiday work in addition to $205 for the other 41 hours worked,
a total of $295. Since this holiday premium is also an overtime premium
under section 7(e)(6), it is excludable from the regular rate and the
employer may credit it toward statutory overtime compensation due.
Because the total thus paid exceeds the statutory requirements, no
additional compensation is due under the Act. In distinguishing this
situation from that in the example in paragraph (a)(2) of this section,
it should be noted that the contract provisions in the two situations
are different and result in the payment of different amounts. In example
(2) the employee received a total of $85 attributable to the holiday: 8
hours' idle holiday pay at $5 an hour, due him whether he worked or not,
and $45 pay at the nonholiday rate for 9 hours' work on the holiday. In
the situation discussed in this paragraph the employee received $90 pay
for working on the holiday--double time for 9 hours of work. Thus,
clearly, all of the pay in this situation is paid for and directly
related to the number of hours worked on the holiday.
[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7312, Jan. 23, 1981]
