§ 778.106 29 CFR Ch. V (7–1–10 Edition)

which a change in the time of com- than one and one-half times such high- mencement of the workweek is made, er rate. Under certain conditions pre- is discussed in §§ 778.301 and 778.302. scribed in section 7 (f), (g), and (j), the Act provides limited exceptions to the § 778.106 Time of payment. application of the general standard of There is no requirement in the Act section 7(a) for computing that overtime compensation be paid pay based on the regular rate. With re- weekly. The general rule is that over- spect to these, see §§ 778.400 through time compensation earned in a par- 778.421 and 778.601 and part 548 of this ticular workweek must be paid on the chapter. The Act also provides, in sec- regular pay day for the period in which tion 7(b), (i), (k) and (m) and in section such workweek ends. When the correct 13, certain partial and total exemptions amount of overtime compensation can- from the application of section 7(a) to not be determined until some time certain employees and under certain after the regular pay period, however, conditions. Regulations and interpreta- the requirements of the Act will be sat- tions concerning these exemptions are isfied if the employer pays the excess outside the scope of this part 778 and overtime compensation as soon after the regular pay period as is prac- reference should be made to other ap- ticable. Payment may not be delayed plicable parts of this chapter. for a period longer than is reasonably [46 FR 7309, Jan. 23, 1981] necessary for the employer to compute and arrange for payment of the amount § 778.108 The ‘‘regular rate’’. due and in no event may payment be The ‘‘regular rate’’ of pay under the delayed beyond the next payday after Act cannot be left to a declaration by such computation can be made. Where the parties as to what is to be treated retroactive increases are made, retroactive overtime compensation is as the regular rate for an employee; it due at the time the increase is paid, as must be drawn from what happens discussed in § 778.303. For a discussion under the contract (Bay of overtime payments due because of Ridge Operating Co. v. Aaron, 334 U.S. increases by way of bonuses, see 446). The Supreme Court has described § 778.209. it as the hourly rate actually paid the employee for the normal, nonovertime PRINCIPLES FOR COMPUTING OVERTIME workweek for which he is employed— PAY BASED ON THE ‘‘REGULAR RATE’’ an ‘‘actual fact’’ (Walling v. Youngerman-Reynolds Hardwood Co., 325 § 778.107 General standard for over- U.S. 419). Section 7(e) of the Act re- time pay. quires inclusion in the ‘‘regular rate’’ The general overtime pay standard in of ‘‘all remuneration for employment section 7(a) requires that overtime paid to, or on behalf of, the employee’’ must be compensated at a rate not less except payments specifically excluded than one and one-half times the reg- by paragraphs (1) through (7) of that ular rate at which the employee is ac- subsection. (These seven types of pay- tually employed. The regular rate of ments, which are set forth in § 778.200 pay at which the employee is employed and discussed in §§ 778.201 through may in no event be less than the statu- tory minimum. (The statutory min- 778.224, are hereafter referred to as imum is the specified ‘‘statutory exclusions.’’) As stated by applicable under section 6 of the Act, the Supreme Court in the Youngerman- except in the case of workers specially Reynolds case cited above: ‘‘Once the provided for in section 14 and workers parties have decided upon the amount in Puerto Rico, the Virgin Islands, and of and the mode of payment the American Samoa who are covered by determination of the regular rate be- wage orders issued pursuant to section comes a matter of mathematical com- 8 of the Act.) If the employee’s regular putation, the result of which is unaf- rate of pay is higher than the statutory fected by any designation of a contrary minimum, his overtime compensation ‘regular rate’ in the wage contracts.’’ must be computed at a rate not less

398

VerDate Mar<15>2010 09:47 Jul 27, 2010 Jkt 220111 PO 00000 Frm 00408 Fmt 8010 Sfmt 8010 Y:\SGML\220111.XXX 220111 jdjones on DSK8KYBLC1PROD with CFR Wage and Hour Division, Labor § 778.111

§ 778.109 The regular rate is an hourly $3.10, or 40 hours at $6.20 plus 6 hours at rate. $9.30). The ‘‘regular rate’’ under the Act is a [46 FR 7309, Jan. 23, 1981] rate per hour. The Act does not require employers to compensate employees on § 778.111 Pieceworker. an hourly rate basis; their earnings (a) Piece rates and supplements gen- may be determined on a piece-rate, sal- erally. When an employee is employed ary, commission, or other basis, but in on a piece-rate basis, his regular hour- such case the overtime compensation ly rate of pay is computed by adding due to employees must be computed on together his total earnings for the the basis of the hourly rate derived workweek from piece rates and all therefrom and, therefore, it is nec- other sources (such as production bo- essary to compute the regular hourly nuses) and any sums paid for waiting rate of such employees during each time or other hours worked (except workweek, with certain statutory ex- statutory exclusions): This sum is then ceptions discussed in §§ 778.400 through divided by the number of hours worked 778.421. The regular hourly rate of pay in the week for which such compensa- of an employee is determined by divid- tion was paid, to yield the piece- ing his total remuneration for employ- worker’s ‘‘regular rate’’ for that week. ment (except statutory exclusions) in For his overtime the piece-work- any workweek by the total number of er is entitled to be paid, in addition to hours actually worked by him in that his total weekly earnings at this reg- workweek for which such compensa- ular rate for all hours worked, a sum tion was paid. The following sections equivalent to one-half this regular rate give some examples of the proper of pay multiplied by the number of method of determining the regular rate hours worked in excess of 40 in the of pay in particular instances: (The week. (For an alternative method of maximum hours standard used in these complying with the overtime require- examples is 40 hours in a workweek). ments of the Act as far as pieceworkers are concerned, see § 778.418.) Only addi- § 778.110 Hourly rate employee. tional half-time pay is required in such (a) Earnings at hourly rate exclusively. cases where the employee has already If the employee is employed solely on received straight-time compensation at the basis of a single hourly rate, the piece rates or by supplementary pay- hourly rate is his ‘‘regular rate.’’ For ments for all hours worked. Thus, if his overtime work he must be paid, in the employee has worked 50 hours and addition to his straight time hourly has earned $245.50 at piece rates for 46 earnings, a sum determined by multi- hours of productive work and in addi- plying one-half the hourly rate by the tion has been compensated at $5.00 an number of hours worked in excess of 40 hour for 4 hours of waiting time, his in the week. Thus a $6 hourly rate will total compensation, $265.50 must be di- bring, for an employee who works 46 vided by his total hours of work, 50, to hours, a total weekly wage of $294 (46 arrive at his regular hourly rate of hours at $6 plus 6 at $3). In other words, pay—$5.31. For the 10 hours of overtime the employee is entitled to be paid an the employee is entitled to additional amount equal to $6 an hour for 40 hours compensation of $26.55 (10 hours at and $9 an hour for the 6 hours of over- $2.655). For the week’s work he is thus time, or a total of $294. entitled to a total of $292.05 (which is (b) Hourly rate and bonus. If the em- equivalent to 40 hours at $5.31 plus 10 ployee receives, in addition to his earn- overtime hours at $7.965). ings at the hourly rate, a production (b) Piece rates with minimum hourly bonus of $9.20, the regular hourly rate guarantee. In some cases an employee is of pay is $6.20 an hour (46 hours at $6 hired on a piece-rate basis coupled with yields $276; the addition of the $9.20 a minimum hourly guaranty. Where bonus makes a total of $285.20; this the total piece-rate earnings for the total divided by 46 hours yields a rate workweek fall short of the amount of $6.20). The employee is then entitled that would be earned for the total to be paid a total wage of $303.80 for 46 hours of work at the guaranteed rate, hours (46 hours at $6.20 plus 6 hours at the employee is paid the difference. In

399

VerDate Mar<15>2010 09:47 Jul 27, 2010 Jkt 220111 PO 00000 Frm 00409 Fmt 8010 Sfmt 8010 Y:\SGML\220111.XXX 220111 jdjones on DSK8KYBLC1PROD with CFR § 778.112 29 CFR Ch. V (7–1–10 Edition)

such weeks the employee is in fact paid longer than a workweek, such as a at an hourly rate and the minimum month, it must be reduced to its work- hourly guaranty which he was paid is week equivalent. A monthly is his regular rate in that week. In the subject to translation to its equivalent example just given, if the employee weekly wage by multiplying by 12 (the was guaranteed $5.50 an hour for pro- number of months) and dividing by 52 ductive , he would be paid (the number of weeks). A semimonthly $253 (46×$5.50) for the 46 hours of pro- salary is translated into its equivalent ductive work (instead of the $245.50 weekly wage by multiplying by 24 and earned at piece rates). In a week in dividing by 52. Once the weekly wage is which no waiting time was involved, he arrived at, the regular hourly rate of would be owed an additional $2.75 (half pay will be calculated as indicated time) for each of the 6 overtime hours above. The regular rate of an employee worked, to bring his total compensa- who is paid a regular monthly salary of tion up to $269.50 (46 hours at $5.50 plus $1,040, or a regular semimonthly salary 6 hours at $2.75 or 40 hours at $5.50 plus of $520 for 40 hours a week, is thus 6 hours at $8.25). If he is paid at a dif- found to be $6 per hour. Under regula- ferent rate for waiting time, his reg- tions of the Administrator, pursuant to ular rate is the weighted average of the the authority given to him in section 2 hourly rates, as discussed in § 778.115. 7(g)(3) of the Act, the parties may pro- vide that the regular rates shall be de- [46 FR 7309, Jan. 23, 1981] termined by dividing the monthly sal- § 778.112 Day rates and rates. ary by the number of working days in the month and then by the number of If the employee is paid a flat sum for hours of the normal or regular work- a day’s work or for doing a particular day. Of course, the resultant rate in job, without regard to the number of such a case must not be less than the hours worked in the day or at the job, statutory minimum wage. and if he receives no other form of compensation for services, his regular [46 FR 7310, Jan. 23, 1981] rate is determined by totaling all the sums received at such day rates or job § 778.114 Fixed salary for fluctuating rates in the workweek and dividing by hours. the total hours actually worked. He is (a) An employee employed on a sal- then entitled to extra half-time pay at ary basis may have hours of work this rate for all hours worked in excess which fluctuate from week to week and of 40 in the workweek. the salary may be paid him pursuant to an understanding with his employer § 778.113 Salaried employees—general. that he will receive such fixed amount (a) Weekly salary. If the employee is as straight time pay for whatever employed solely on a weekly salary hours he is called upon to work in a basis, his regular hourly rate of pay, on workweek, whether few or many. which time and a half must be paid, is Where there is a clear mutual under- computed by dividing the salary by the standing of the parties that the fixed number of hours which the salary is in- salary is compensation (apart from tended to compensate. If an employee overtime premiums) for the hours is hired at a salary of $182.70 and if it worked each workweek, whatever their is understood that this salary is com- number, rather than for working 40 pensation for a regular workweek of 35 hours or some other fixed weekly work hours, the employee’s regular rate of period, such a salary arrangement is pay is $182.70 divided by 35 hours, or permitted by the Act if the amount of $5.22 an hour, and when he works over- the salary is sufficient to provide com- time he is entitled to receive $5.22 for pensation to the employee at a rate not each of the first 40 hours and $7.83 (one less than the applicable minimum wage and one-half times $5.22) for each hour rate for every hour worked in those thereafter. If an employee is hired at a workweeks in which the number of salary of $220.80 for a 40-hour week his hours he works is greatest, and if he re- regular rate is $5.52 an hour. ceives extra compensation, in addition (b) Salary for periods other than work- to such salary, for all overtime hours week. Where the salary covers a period worked at a rate not less than one-half

400

VerDate Mar<15>2010 09:47 Jul 27, 2010 Jkt 220111 PO 00000 Frm 00410 Fmt 8010 Sfmt 8010 Y:\SGML\220111.XXX 220111 jdjones on DSK8KYBLC1PROD with CFR Wage and Hour Division, Labor § 778.116

his regular rate of pay. Since the sal- salary even though the workweek is ary in such a situation is intended to one in which a full of hours is compensate the employee at straight not worked. Typically, such time rates for whatever hours are are paid to employees who do not cus- worked in the workweek, the regular tomarily work a regular schedule of rate of the employee will vary from hours and are in amounts agreed on by week to week and is determined by di- the parties as adequate straight-time viding the number of hours worked in compensation for long workweeks as the workweek into the amount of the well as short ones, under the cir- salary to obtain the applicable hourly cumstances of the employment as a rate for the week. Payment for over- whole. Where all the legal prerequisites time hours at one-half such rate in ad- for use of the ‘‘fluctuating workweek’’ dition to the salary satisfies the over- method of overtime payment are time pay requirement because such present, the Act, in requiring that ‘‘not hours have already been compensated less than’’ the prescribed premium of 50 at the straight time regular rate, under percent for overtime hours worked be the salary arrangement. paid, does not prohibit paying more. On (b) The application of the principles the other hand, where all the facts in- above stated may be illustrated by the dicate that an employee is being paid case of an employee whose hours of for his overtime hours at a rate no work do not customarily follow a reg- greater than that which he receives for ular schedule but vary from week to nonovertime hours, compliance with week, whose overtime work is never in the Act cannot be rested on any appli- excess of 50 hours in a workweek, and cation of the fluctuating workweek whose salary of $250 a week is paid with overtime formula. the understanding that it constitutes [33 FR 986, Jan. 26, 1968, as amended at 46 FR his compensation, except for overtime 7310, Jan. 23, 1981] premiums, for whatever hours are worked in the workweek. If during the § 778.115 Employees working at two or course of 4 weeks this employee works more rates. 40, 44, 50, and 48 hours, his regular Where an employee in a single work- hourly rate of pay in each of these week works at two or more different weeks is approximately $6.25, $5.68, $5, types of work for which different non- and $5.21, respectively. Since the em- overtime rates of pay (of not less than ployee has already received straight- the applicable minimum wage) have time compensation on a salary basis been established, his regular rate for for all hours worked, only additional that week is the weighted average of half-time pay is due. For the first week such rates. That is, his total earnings the employee is entitled to be paid $250; (except statutory exclusions) are com- for the second week $261.36 ($250 plus 4 puted to include his compensation dur- hours at $2.84, or 40 hours at $5.68 plus ing the workweek from all such rates, 4 hours at $8.52); for the third week $275 and are then divided by the total num- ($250 plus 10 hours at $2.50, or 40 hours ber of hours worked at all . Certain at $5 plus 10 hours at $7.50); for the statutory exceptions permitting alter- fourth week approximately $270.88 ($250 native methods of computing overtime plus 8 hours at $2.61 or 40 hours at $5.21 pay in such cases are discussed in plus 8 hours at $7.82). §§ 778.400 and 778.415 through 778.421. (c) The ‘‘fluctuating workweek’’ method of overtime payment may not § 778.116 Payments other than cash. be used unless the salary is sufficiently Where payments are made to employ- large to assure that no workweek will ees in the form of goods or facilities be worked in which the employee’s av- which are regarded as part of wages, erage hourly earnings from the salary the reasonable cost to the employer or fall below the minimum hourly wage the fair value of such goods or of fur- rate applicable under the Act, and un- nishing such facilities must be in- less the employee clearly understands cluded in the regular rate. (See part 531 that the salary covers whatever hours of this chapter for a discussion as to the job may demand in a particular the inclusion of goods and facilities in workweek and the employer pays the wages and the method of determining

401

VerDate Mar<15>2010 09:47 Jul 27, 2010 Jkt 220111 PO 00000 Frm 00411 Fmt 8010 Sfmt 8010 Y:\SGML\220111.XXX 220111 jdjones on DSK8KYBLC1PROD with CFR § 778.117 29 CFR Ch. V (7–1–10 Edition)

reasonable cost.) Where, for example, sometime after the regular pay day for an employer furnishes lodging to his the workweek, the employer may dis- employees in addition to cash wages regard the commission in computing the reasonable cost or the fair value of the regular hourly rate until the the lodging (per week) must be added amount of commission can be to the cash wages before the regular ascertained. Until that is done he may rate is determined. pay compensation for overtime at a rate not less than one and one-half [46 FR 7310, Jan. 23, 1981] times the hourly rate paid the em- § 778.117 Commission payments—gen- ployee, exclusive of the commission. eral. When the commission can be computed and paid, additional overtime com- Commissions (whether based on a pensation due by reason of the inclu- percentage of total sales or of sales in sion of the commission in the employ- excess of a specified amount, or on ee’s regular rate must also be paid. To some other formula) are payments for compute this additional overtime com- hours worked and must be included in pensation, it is necessary, as a general the regular rate. This is true regardless rule, that the commission be appor- of whether the commission is the sole tioned back over the workweeks of the source of the employee’s compensation period during which it was earned. The or is paid in addition to a guaranteed employee must then receive additional salary or hourly rate, or on some other overtime compensation for each week basis, and regardless of the method, during the period in which he worked frequency, or regularity of computing, in excess of the applicable maximum allocating and paying the commission. hours standard. The additional com- It does not matter whether the com- pensation for that workweek must be mission earnings are computed daily, not less than one-half of the increase in weekly, biweekly, semimonthly, the hourly rate of pay attributable to monthly, or at some other interval. the commission for that week The fact that the commission is paid multipled by the number of hours on a basis other than weekly, and that worked in excess of the applicable max- payment is delayed for a time past the imum hours standard in that work- employee’s normal pay day or pay pe- week. riod, does not excuse the employer from including this payment in the em- § 778.120 Deferred commission pay- ployee’s regular rate. ments not identifiable as earned in [36 FR 4981, Mar. 16, 1971] particular workweeks. If it is not possible or practicable to § 778.118 Commission paid on a work- allocate the commission among the week basis. workweeks of the period in proportion When the commission is paid on a to the amount of commission actually weekly basis, it is added to the employ- earned or reasonably presumed to be ee’s other earnings for that workweek earned each week, some other reason- (except overtime premiums and other able and equitable method must be payments excluded as provided in sec- adopted. The following methods may be tion 7(e) of the Act), and the total is di- used: vided by the total number of hours (a) Allocation of equal amounts to each worked in the workweek to obtain the week. Assume that the employee employee’s regular hourly rate for the earned an equal amount of commission particular workweek. The employee in each week of the commission com- must then be paid extra compensation putation period and compute any addi- at one-half of that rate for each hour tional overtime compensation due on worked in excess of the applicable max- this amount. This may be done as fol- imum hours standard. lows: (1) For a commission computation § 778.119 Deferred commission pay- period of 1 month, multiply the com- ments—general rules. mission payment by 12 and divide by 52 If the calculation and payment of the to get the amount of commission allo- commission cannot be completed until cable to a single week. If there is a

402

VerDate Mar<15>2010 09:47 Jul 27, 2010 Jkt 220111 PO 00000 Frm 00412 Fmt 8010 Sfmt 8010 Y:\SGML\220111.XXX 220111 jdjones on DSK8KYBLC1PROD with CFR Wage and Hour Division, Labor § 778.121

semimonthly computation period, mul- as weeks one and three. The additional over- tiply the commission payment by 24 time pay due may also be computed by mul- and divide by 52 to get each week’s tiplying the amount of the weekly increase commission. For a commission com- by the appropriate decimal on the coefficient putation period of a specific number of table, for each week in which overtime was worked. workweeks, such as every 4 weeks (as distinguished from every month) divide (b) Allocation of equal amounts to each the total amount of commission by the hour worked. Sometimes, there are number of weeks for which it rep- facts which make it inappropriate to resents additional compensation to get assume equal commission earnings for the amount of commission allocable to each workweek. For example, the num- each week. ber of hours worked each week may (2) Once the amount of commission vary significantly. In such cases, rath- allocable to a workweek has been er than following the method outlined ascertained for each week in which in paragraph (a) of this section, it is overtime was worked, the commission reasonable to assume that the em- for that week is divided by the total ployee earned an equal amount of com- number of hours worked in that week, mission in each hour that he worked to get the increase in the hourly rate. during the commission computation Additional overtime due is computed period. The amount of the commission by multiplying one-half of this figure payment should be divided by the num- by the number of overtime hours ber of hours worked in the period in worked in the week. A shorter method order to determine the amount of the of obtaining the amount of additional increase in the regular rate allocable overtime compensation due is to mul- to the commission payment. One-half tiply the amount of commission allo- of this figure should be multiplied by cable to the week by the decimal the number of statutory overtime equivalent of the fraction hours worked by the employee in the Overtime hours overtime workweeks of the commission ———————— computation period, to get the amount of additional overtime compensation Total hours × 2 due for this period. A coefficient table (WH–134) has been Example: An employee received commis- prepared which contains the appro- sions of $192 for a commission computation priate decimals for computing the period of 96 hours, including 16 overtime extra half-time due. hours (i.e., two workweeks of 48 hours each). Dividing the $192 by 96 gives a $2 increase in Examples: (i) If there is a monthly commis- the hourly rate. If the employee is entitled sion payment of $416, the amount of commis- to overtime after 40 hours in a workweek, he sion allocable to a single week is $96 is due an additional $16 for the commission ($416×12=$4,992÷52=$96). In a week in which an computation period, representing an addi- employee who is due overtime compensation tional $1 for each of the 16 overtime hours. after 40 hours works 48 hours, dividing $96 by 48 gives the increase to the regular rate of $2. [33 FR 986, Jan. 26, 1968, as amended at 46 FR Multiplying one-half of this figure by 8 over- 7310, Jan. 23, 1981] time hours gives the additional overtime pay due of $8. The $96 may also be multiplied by § 778.121 Commission payments—de- 0.083 (the appropriate decimal shown on the layed credits and debits. coefficient table) to get the additional over- time pay due of $8. If there are delays in crediting sales (ii) An employee received $384 in commis- or debiting returns or allowances sions for a 4-week period. Dividing this by 4 which affect the computation of com- gives him a weekly increase of $96. Assume missions, the amounts paid to the em- that he is due overtime compensation after ployee for the computation period will 40 hours and that in the 4-week period he be accepted as the total commission worked 44, 40, 44 and 48 hours. He would be earnings of the employee during such due additional compensation of $4.36 for the period, and the commission may be al- first and third week ($96÷44=$2.18÷2=$1.09×4 overtime hours=$4.36), no extra compensa- located over the period from the last tion for the second week during which no commission computation date to the overtime hours were worked, and $8 for the present commission computation date, fourth week, computed in the same manner even though there may be credits or

403

VerDate Mar<15>2010 09:47 Jul 27, 2010 Jkt 220111 PO 00000 Frm 00413 Fmt 8010 Sfmt 8010 Y:\SGML\220111.XXX 220111 jdjones on DSK8KYBLC1PROD with CFR § 778.122 29 CFR Ch. V (7–1–10 Edition)

debits resulting from work which actu- lations which he shall issue, having due re- ally occurred during a previous period. gard among other relevant factors, to the ex- The hourly increase resulting from the tent to which the amounts paid to the em- commission may be computed as out- ployee are determined without regard to hours of work, production, or efficiency; or lined in the preceding paragraphs. (c) the payments are talent fees (as such tal- ent fees are defined and delimited by regula- § 778.122 Computation of overtime for tions of the Secretary) paid to performers, commission employees on estab- including announcers, on radio and tele- lished basic rate. vision programs; [discussed in §§ 778.208 Overtime pay for employees paid through 778.215 and 778.225]. wholly or partly on a commission basis (4) Contributions irrevocably made by an may be computed on an established employer to a trustee or third person pursu- basic rate, in lieu of the method de- ant to a bona fide plan for providing old-age, , life, accident, or health insur- scribed above. See § 778.400 and part 548 ance or similar benefits for employees; [dis- of this chapter. cussed in §§ 778.214 and 778.215]. (5) Extra compensation provided by a pre- Subpart C—Payments That May mium rate paid for certain hours worked by the employee in any day or workweek be- Be Excluded From the ‘‘Reg- cause such hours are hours worked in excess ular Rate’’ of eight in a day or in excess of the max- imum workweek applicable to such employee THE STATUTORY PROVISIONS under subsection (a) or in excess of the em- ployee’s normal working hours or regular § 778.200 Provisions governing inclu- working hours, as the case may be; [dis- sion, exclusion, and crediting of cussed in §§ 778.201 and 778.202]. particular payments. (6) Extra compensation provided by a pre- (a) Section 7(e). This subsection of the mium rate paid for work by the employee on Act provides as follows: Saturdays, Sundays, holidays, or regular days of rest, or on the sixth or seventh day As used in this section the ‘‘regular rate’’ of the workweek, where such premium rate at which an employee is employed shall be is not less than one and one-half times the deemed to include all remuneration for em- rate established in good faith for like work ployment paid to, or on behalf of, the em- performed in nonovertime hours on other ployee, but shall not be deemed to include: days; or [discussed in §§ 778.203, 778.205, and (1) Sums paid as gifts; payments in the na- 778.206]. ture of gifts made at Christmas time or on (7) Extra compensation provided by a pre- other special occasions, as a reward for serv- mium rate paid to the employee, in pursu- ice, the amounts of which are not measured ance of an applicable by or dependent on hours worked, produc- or agreement, for work tion, or efficiency; [discussed in § 778.212]. outside of the hours established in good faith (2) Payments made for occasional periods by the contract or agreement as the basic, when no work is performed due to vacation, normal, or regular workday (not exceeding holiday, illness, failure of the employer to eight hours) or workweek (not exceeding the provide sufficient work, or other similar maximum workweek applicable to such em- cause; reasonable payments for traveling ex- ployee under subsection (a)), where such pre- penses, or other expenses, incurred by an em- mium rate is not less than one and one-half ployee in the furtherance of his employer’s times the rate established in good faith by interests and properly reimbursable by the the contract or agreement for like work per- employer; and other similar payments to an formed during such workday or workweek; employee which are not made as compensa- [discussed in §§ 778.201 and 778.206]. tion for his hours of employment; [discussed (b) Section 7(h). This subsection of the in §§ 778.216 through 778.224]. Act provides as follows: (3) Sums paid in recognition of services performed during a given period if either, (a) Extra compensation paid as described in both the fact that payment is to be made and paragraphs (5), (6), and (7) of subsection (e) the amount of the payment are determined shall be creditable toward overtime com- at the sole discretion of the employer at or pensation payable pursuant to this section. near the end of the period and not pursuant (c) Only the statutory exclusions are to any prior contract, agreement, or promise authorized. It is important to deter- causing the employee to expect such pay- mine the scope of these exclusions, ments regularly; or (b) the payments are made pursuant to a bona fide profit-sharing since all remuneration for employment plan or trust or bona fide thrift or savings paid to employees which does not fall plan, meeting the requirements of the Sec- within one of these seven exclusionary retary of Labor set forth in appropriate regu- clauses must be added into the total

404

VerDate Mar<15>2010 09:47 Jul 27, 2010 Jkt 220111 PO 00000 Frm 00414 Fmt 8010 Sfmt 8010 Y:\SGML\220111.XXX 220111 jdjones on DSK8KYBLC1PROD with CFR