(a) The application must set forth the facts relied upon to show
that the established basic rate is substantially equivalent to the
average hourly earnings of the employee exclusive of overtime premiums
over a representative period of time.21 The basic rate will
be considered ``substantially equivalent'' to the average hourly
earnings of the employee if, during a representative period, the
employee's total overtime earnings calculated at the basic rate in
accordance with the applicable overtime provisions are approximately
equal to the employee's total overtime earnings computed on his average
hourly earnings for each workweek in accordance with section 7(a) of the
Act.22
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21 See Secs. 778.200 through 778.207 of this chapter for
further discussion of overtime premiums which may be excluded from the
regular rate of pay.
22 See Secs. 778.208 through 778.225 of this chapter for
further discussion of the exclusion of vacation pay, holiday pay,
discretionary bonuses and other payments from the average hourly
earnings which comprise the employee's regular rate of pay.
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(b) The length of time constituting a representative period will
depend on the factors that cause the employee's average hourly earnings
to vary appreciably from week to week. For instance, if the variation in
earnings of an employee paid on an incentive basis is due to the
difference in availability of work in the slow and busy seasons the
period used for comparison of overtime earnings would have to include
both a slow and a busy season in order to be representative. Likewise,
if a piece-worker's average hourly earnings vary appreciably from week
to week because of differences in materials or styles worked on, the
period used for
purposes of comparison would have to include work on the different
materials and styles in order to be representative.
[20 FR 5683, Aug. 6, 1955]
Computation of Overtime Pay
