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Content Last Revised: 1/23/81
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CFR  

Code of Federal Regulations Pertaining to ESA

Title 29  

Labor

 

Chapter V  

Wage and Hour Division, Department of Labor

 

 

Part 778  

Overtime Compensation

 

 

 

Subpart D  

Special Problems


29 CFR 778.306 - Salary reductions in short workweeks.

  • Section Number: 778.306
  • Section Name: Salary reductions in short workweeks.

    (a) The reductions in pay described in Sec. 778.304(a)(4) are not, 
properly speaking, ``deductions'' at all. If an employee is compensated 
at a fixed salary for a fixed workweek and if this salary is reduced by 
the amount of the average hourly earnings for each hour lost by the 
employee in a short workweek, the employee is, for all practical 
purposes, employed at an hourly rate of pay. This hourly rate is the 
quotient of the fixed salary divided by the fixed number of hours it is 
intended to compensate. If an employee is hired at a fixed salary of 
$200 for a 40-hour week, his hourly rate is $5. When he works only 36 
hours he is therefore entitled to $180. The employer makes a 
``deduction'' of $20 from his salary to achieve this result. The regular 
hourly rate is not altered.
    (b) When an employee is paid a fixed salary for a workweek of 
variable hours (or a guarantee of pay under the provisions of section 
7(f) of the Act, as discussed in Secs. 778.402 through 778.414), the 
understanding is that the salary or guarantee is due the employee in 
short workweeks as well as in longer ones and ``deductions'' of this 
type are not made. Therefore, in cases where the understanding of the 
parties is not clearly shown as to whether a fixed salary is intended to 
cover a fixed or a variable workweek the practice of making 
``deductions'' from the salary for hours not worked in short weeks will 
be considered strong, if not conclusive, evidence that the salary covers 
a fixed workweek.
[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7314, Jan. 23, 1981]
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