Extra overtime compensation must be separately computed and paid on
payments such as bonuses or shift differentials which are not included
in the computation of the established basic rate and which would have
been included in the regular rate of pay.26
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26 Unless specifically excluded by agreement or understanding
and prior authorization is obtained from the Administrator. See
Sec. 548.400(b).
Example 1. An employee is paid on an hourly rate basis plus a
production bonus, and also a shift differential of 10 cents for each
hour worked on the second shift. The authorized basic rate under the
agreement is the employee's daily average hourly earnings, and under the
employment agreement he is paid one and one-half times the basic rate
for all hours worked in excess of 8 each day. Suppose his production
bonus is included in the computation of the basic rate, but the shift
differential is not. In addition to overtime compensation computed at
the basic rate the employee must be paid an extra 5 cents for each
overtime hour worked on the second shift.
Example 2. A piece worker, under his employment agreement, is paid
overtime compensation for daily overtime and for hours of work on
Saturday based on an authorized basic rate obtained by averaging his
piece work earnings for the half-month. In addition, he is paid a
monthly cost-of-living bonus which is not included in the computation of
the basic rate. It will be necessary for the employer to compute and pay
overtime compensation separately on the bonus. 27
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27 See Sec. 778.209 of this chapter for an explanation of how
to compute overtime on the bonus.
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[20 FR 5683, Aug. 6, 1955]
