[Code of Federal Regulations]
[Title 29, Volume 3]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR531.37]

[Page 169-170]
 
                             TITLE 29--LABOR
 
         CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR
 
PART 531_WAGE PAYMENTS UNDER THE FAIR LABOR STANDARDS ACT OF 1938
--Table of Contents
 
                        Subpart C_Interpretations
 
Sec. 531.37  Overtime workweeks.

    (a) Section 7 requires that the employee receive compensation for 
overtime hours at ``a rate of not less than one and one-half times the 
regular rate at which he is employed.'' When overtime is worked by an 
employee who receives the whole or part of his wage in facilities and it 
becomes necessary to determine the portion of his wages represented by 
facilities, all such facilities must be measured by the requirements of 
section 3(m) and subpart B of this part. It is the Administrator's 
opinion that deductions may be made, however, on the same basis in an 
overtime workweek as in nonovertime workweeks (see Sec. 531.36), if 
their purpose and effect are not to evade the overtime requirements of 
the Act or other law, providing the amount deducted does not exceed the 
amount which could be deducted if the employee had only worked the 
maximum number of straight-time hours during the workweek. For example, 
in a situation where $1.60 an hour is the applicable minimum wage, if an 
employee is employed at a rate of $1.65 an hour (5 cents in excess of 
the minimum wage) the maximum amount which may be deducted from his 
wages in a 40-hour workweek for items such as tools, dynamite caps, 
miners' lamps, or other articles which are not `TT`TfacilitiesT'TT' 
within the meaning of the Act, is 40 times

[[Page 170]]

5 cents or $2 (see Sec. 531.36). Deductions in excess of this amount 
for such articles are illegal in overtime workweeks as well as in 
nonovertime workweeks. There is no limit on the amount which may be 
deducted for ``board, lodging, or other facilities'' in overtime 
workweeks (as in workweeks when no overtime is worked), provided that 
these deductions are made only for the ``reasonable cost'' of the items 
furnished. When such items are furnished at a profit, the amount of the 
profit (plus the full amount of any deductions for articles which are 
not facilities) may not exceed $2 in the example heretofore used in this 
paragraph. These principles assume a situation where bona fide 
deductions are made for particular items in accordance with the 
agreement or understanding of the parties. If the situation is solely 
one of refusal or failure to pay the full amount of wages required by 
section 7, these principles have no application. Deductions made only in 
overtime workweeks, or increases in the prices charged for articles or 
services during overtime workweeks will be scrutinized to determine 
whether they are manipulations to evade the overtime requirements of the 
Act.
    (b) Where deductions are made from the stipulated wage of an 
employee, the regular rate of pay is arrived at on the basis of the 
stipulated wage before any deductions have been made. Where board, 
lodging, or other facilities are customarily furnished as addition to a 
cash wage, the reasonable cost of the facilities to the employer must be 
considered as part of the employee's regular rate of pay. See Walling v. 
Alaska Pacific Consolidated Mining Co., 152 F. (2d) 812 (C.A. 9), cert. 
denied, 327 U.S. 803. Thus, suppose an employee employed at a cash rate 
of $2 an hour, whose maximum nonovertime workweek under section 7(a) of 
the Act is 40 hours, works 44 hours during a particular workweek. If, in 
addition, he is furnished board, lodging, or other facilities valued at 
$16, but whose ``reasonable cost'' is $11, the $11 must be added to his 
cash straight-time pay of $88 ($2 x 44 hours) in determining the regular 
rate of pay on which his overtime compensation is to be calculated. The 
regular rate then becomes $2.25 an hour (($88+$11=$99)/(44 hours)=$2.25 
an hour). The employee is thus entitled to receive a total of $103.50 
for the week ((40 hours x $2.25=$90)+(4 hours x $3.37 \1/2\ =$13.50)). 
In addition to the straight-time pay of $88 in cash and $11 in 
facilities, extra compensation of $4.50 in cash for the 4 overtime hours 
must, therefore, be paid by the employer, to meet the requirements of 
the Act.

              Payments Made to Persons Other Than Employees