(a) As noted in Sec. 794.141, the partial exemption provided by
section 7(b)(3) from the requirement that overtime hours be paid for at
not less than one and one-half times the employee's regular rate applies
only to ``employment up to 12 hours in any workday and up to 56 hours in
any workweek.'' The statute makes it plain that in any workweek when an
employee otherwise eligible for the exemption works more than the
specified daily or weekly hours the exemption applies only ``if such
employee receives compensation for employment in excess of 12 hours in
any workday, or for employment in excess of 56 hours in any workweek, as
the case may be, at a rate not less than one and one-half times the
regular rate at which he is employed.'' Failure of the employer to pay
overtime compensation under these special standards defeat the
exemption. (See Wirtz v. Osceola Farms Co., 372 F. 2d 584 (C.A. 5);
Holtville Alfalfa Mills v. Wyatt, 230 F. 2d 298 (C.A. 9).)
(b) Under this provision, the number of hours worked in the workweek
which are in excess of 12 in any workday or workdays therein, or the
number in excess of 56 in the week, whichever is the greater number,
must be compensated as provided in section 7(b)(3). Thus, the requisite
time-and-one-half compensation must be paid for all daily overtime hours
in excess of 12 per day worked by an employee in a workweek when his
hours worked do not exceed 56 in the week; and for all weekly overtime
hours in excess of 56 which he works in a workweek when he does not work
more than 12 hours in any day. When an employee works in excess of both
the daily and weekly maximum hours standards in any workweek for which
the exemption is claimed, he must be paid at such overtime rate for all
hours worked in the workweek in excess of the applicable daily maximum
or in excess of the applicable weekly maximum, whichever number of hours
is greater. Thus, if his total hours of work in the workweek which are
in excess of the daily maximum are 10 and his hours in excess of the
weekly maximum are 8, overtime compensation is required for 10 hours,
not 18. As an example, suppose an employee employed at an hourly rate of
$2.40 is employed under the other conditions specified for exemption
under section 7(b)(3) and works the following schedule:
------------------------------------------------------------------------
Hours M T W T F S S Tot.
------------------------------------------------------------------------
Worked................................ 14 9 10 15 12 8 0 68
------------------------------------------------------------------------
Number of overtime hours in excess of 56 in the workweek, 12; number of
hours in excess of 12 per day, five.
Since the weekly overtime hours are greater, the employee is entitled to
overtime pay for 12 hours at $3.60 an hour (1\1/2\ x $2.40), a total of
$43.60 for the overtime hours, in addition to pay at his regular rate
for the remaining 56 hours (56 x $2.40) in the amount of $134.40, or a
total of $177.60 for the week. If the employee had not worked the 8
hours on Saturday, his total hours worked in the week would have been
60, of which five were daily overtime hours, and there would have been 4
weekly overtime hours under the section 7(b) standard. For such a
schedule the employee would be entitled to 5 hours of overtime pay at
time and one-half (5 x 1\1/2\ x $2.40=$18) plus the pay at his regular
rate for the remaining 55 hours (55 x $2.40=$132) making a total of $150
due him for the week.
(c) The overtime compensation payable to an employee under section
7(b)(3) when his hours worked in the workweek are in excess of 12 in any
workday or in excess of 56 in the week must be ``at a rate not less than
one and one-half times the regular rate at which he is employed.'' This
extra compensation for the excess hours cannot be said to have been paid
to an employee unless all the straight time compensation due him for the
nonovertime hours under his contract (express or implied) or under any
applicable statute has been paid (Sec. 778.315 of this chapter). In
computing the extra compensation due, the ``regular rate'' of the
employee is calculated in accordance with section 7(e) of the Act, as
explained in Sec. 778.107 of this chapter, et seq., and can in no event
be less than the minimum required by the Act (see Sec. 778.107 of this
chapter). Since, for exemption from section 7(a) under section 7(b)(3)
in workweeks exceeding 40
hours, the Act requires that the employee receive not only compensation
for 40 hours at not less than the minimum rate prescribed in section 6
but also ``compensation for employment in excess of 40 hours'' at a rate
not less than one and one-half times such minimum rate, the ``regular
rate'', on which time-and-one-half overtime pay must be computed for
daily hours worked in excess of 12 or weekly hours worked in excess of
56, must be calculated in conformity with these minimum standards.
(d) The following illustrations of the application of these
principles in the case of an employee whose applicable minimum wage rate
under section 6 is $1.60 an hour may be helpful. First, suppose the
``regular rate'' at which such an employee is employed, calculated in
accordance with section 7(e) of the Act and part 778 of this chapter, is
$2.40 an hour or more. This would be true of an employee employed solely
at a single hourly rate of pay of $2.40 or more which he receives as
straight time compensation for every hour of work. It would likewise be
true of an employee, however compensated (whether by a salary for a
fixed or variable number of hours, by commissions, piece rates, day
rates or other pay systems or by a combination of these), whose pay for
all hours worked in the workweek (except amounts excluded under section
7(e)) yields him average hourly straight-time earnings of $2.40 or more
an hour. Since the employee's regular rate received for all nonovertime
hours of work is in such a case not less than one and one-half times his
applicable minimum rate under section 6, the compensation requirements
of section 7(b)(3) are satisfied for all nonovertime as well as overtime
hours worked if he receives compensation at his ``regular rate'' of
$2.40 or more an hour for all hours worked in his workweek which are not
in excess of 12 in his workday or 56 in his workweek, together with
extra compensation for overtime in an amount sufficient to provide
compensation for all his hours worked in excess of such daily or weekly
hours, whichever are greater, at a rate at least 50 percent higher than
such regular rate (at least $3.60 an hour if the regular rate is $2.40
an hour). A somewhat different situation is presented, however, where
the employee whose applicable minimum wage under section 6 is $1.60 an
hour is paid, as the Act permits, at a wage rate for nonovertime hours
up to 40 in the workweek which is not less than the $1.60 minimum but is
not as much as the $2.40 required for hours of employment in excess of
40. As an example, suppose he is paid $2 an hour for 40 hours and $2.40
as required by section 7(b)(3) for hours in excess of 40, and works 60
hours in a workweek in which 10 of his hours worked are in excess of 12
in a workday for which overtime compensation must be paid at not less
than one and one-half times his regular rate of pay. Since payment of
the $2 and $2.40 rates for hours worked up to and in excess of 40,
respectively, satisfies the straight-time requirements for compensation
under section 7(b)(3), all the compensation requirements for exemption
thereunder will be satisfied if, in addition, he is paid for the 10
daily overtime hours an extra sum equal to one-half his ``regular rate''
multiplied by 10. His regular rate is computed for the workweek by
dividing his total straight-time compensation for the week by the number
of hours worked for which it is paid and is accordingly $2.133 an hour
($2 x 40 = $80; $2.40 x 20 = $48; $80 + 48 = $128; $128 / 60 =
$2.133; see Sec. 778.115 of this chapter). Thus, the section 7(b)(3)
compensation requirements are satisfied by payment of straight-time
compensation in the amount of $80 for 40 hours of work and in the amount
of $48 for the 20 additional hours worked, together with $10.67 as
overtime premium for the 10 daily overtime hours ($2.133 x \1/2\ x 10),
or total pay of $138.67 for the week.
