The Department of Labor’s Wage and Hour Division (WHD) recently published seven opinion letters offering guidance on the proper application of the Fair Labor Standards Act (FLSA). The opinion letters addressed three main subject matters: (1) the proper calculation of an employee’s regular rate for on-call and commissioned employees, (2) the application of the FLSA in non-profit situation, and (3) the application of the teaching exemption in several contexts. The two regular rate opinion letters are discussed in greater detail below.    

The FLSA requires that overtime compensation be paid at a rate of not less than one and one-half times the regular rate of pay for all hours worked in excess of 40 in a workweek. See 29 C.F.R. Part 778. The regular rate of pay of an employee “is determined by dividing his total remuneration for employment (except statutory exclusions) in any workweek by the total number of hours actually worked by him in that workweek.” 29 C.F.R. § 778.108.

The first WHD opinion letter deals with how to calculate the regular rate for an employee who was paid $2.50 an hour for on-call time as per the company’s collective bargaining agreement. During a two-week pay period, employees worked one week on-call and one week not on-call. The employer wanted to see whether compensation for on-call time in a specific week could be averaged over a two-week period. The WHD determined that averaging was not a lawful practice because the “FLSA takes the single workweek as its standard and does not permit the averaging of hours over two or more weeks whether the employee is paid on a daily, weekly, biweekly, monthly, or other basis.” If an employee worked overtime during a week when that employee was on-call, then the employee must be paid one and one-half times the sum of his normal salary and his on-call pay.

The second WHD opinion letter addressed how employees working for commissions should be paid overtime. An employer paid truck drivers a commission of 27 percent of the gross revenue received by the employer for the materials delivered by the driver each week. At the end of each workweek, the employer divided the commission amount by the total number of hours worked to determine each truck driver’s regular rate of pay. The WHD found that this was the proper way to compensate commissioned employees. See 29 C.F.R. § 778.118.

The other five opinion letters concerning non-profits and the teaching exemption are available for review on the WHD Web site, located at:  http://www.dol.gov/esa/whd/opinion/opinion.htm.