(a) Section 548.3(a) authorizes as an established basic rate: ``A
rate per hour which is obtained by dividing a monthly or semi-monthly
salary by the number of regular working days in each monthly or semi-
monthly period and then by the number of hours in the normal or regular
workday. Such a rate may be used to compute overtime compensation for
all the overtime hours worked by the employee during the monthly or
semi-monthly period for which the salary is paid.''
(b) Section 548.3(a) may be applied to salaried employees paid on a
monthly or semi-monthly basis. Under section 7(a) of the Act the method
of computing the regular rate of pay for an employee who is paid on a
monthly or semi-monthly salary basis is to reduce the salary to its
weekly equivalent by multiplying the monthly salary by 12 (the number of
months) or the semi-monthly salary by 24, and dividing by 52 (the number
of weeks). The weekly equivalent is then divided by the number of hours
in the week which the salary is intended to compensate. 8
Section 548.3(a) is designed to provide an alternative method of
computing the rate for overtime purposes in the case of an employee who
is compensated on a monthly or semi-monthly salary basis, where this
method is found more desirable. This method is applicable only where the
salary is paid for a specified number of days per week and a specified
number of hours per day normally or regularly worked by the employee. It
permits the employer to take into account the variations in the number
of regular working days in each pay period. The basic rate authorized by
Sec. 548.3(a) is obtained by dividing the monthly or semi-monthly salary
by the number of regular working days in the month or half-month, and
then by the number of hours of the normal or regular work day.
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8 See Sec. 778.113 of this chapter.
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Example. An employee is compensated at a semi-monthly salary of $154
for a workweek of 5 days of 8 hours each, Monday through Friday. If a
particular half-month begins on Tuesday and ends on the second Tuesday
following, there are 11 working days in that half-month. The employee's
basic rate would then be computed by dividing the $154 salary by 11
working days of 8 hours each, or 88 hours. The basic rate in this
situation would therefore be $1.75 an hour. The basic rate would remain
the same regardless of the fact that the employee did not actually work
11 days of 8 hours each because of the occurrence of a holiday, or
because the employee took a day off, or because he worked longer than 8
hours on some days during the period, or because he worked fewer than 8
hours on some days, or because he worked more then 11 days. In any of
these circumstances the employee's basic rate would still be $1.75 an
hour. If in the next semimonthly period there are 10 working days the
rate would be computed by dividing the salary of $154 by 80 working
hours, or 10 days of 8 hours each. The basic rate would therefore be
$1.925 an hour. The rate would remain $1.925 an hour even though the
employee did not in fact work ten 8-hour days during the period for the
reasons indicated above, or for any other reason.
(c) The overtime compensation for each workweek should be computed
at not less than time and one-half the established basic rate applicable
in the period during which the overtime is worked. Thus, in the example
given above all overtime worked in the first half-month would be
computed at not less than time and one-half the basic rate of $1.75 an
hour; in the second half-month overtime would be paid for at not less
than time and one-half the rate of $1.925 an hour. Where a workweek
overlaps two semimonthly periods part of the overtime may be performed
in one semimonthly period and part in another semimonthly period with a
different basic rate. If it is desired to avoid computing overtime
compensation in the same workweek at two different rates, the employment
arrangement may provide that overtime compensation for each workweek
should be computed at the established basic rate applicable in the half-
monthly or monthly period during which the workweek ends.
(Sec. 1, 52 Stat. 1060, as amended, 29 U.S.C. 201, et seq.)
[20 FR 5681, Aug. 6, 1955, as amended at 32 FR 3293, Feb. 25, 1967]
