[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: 29CFR548.100]

[Page 253-254]
 
                             TITLE 29--LABOR
 
         CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR
 
PART 548_AUTHORIZATION OF ESTABLISHED BASIC RATES FOR COMPUTING OVERTIME 
PAY--Table of Contents
 
                        Subpart B_Interpretations
 
Sec. 548.100  Introductory statement.

                              Introduction


    (a) This subpart contains material explaining and illustrating the 
terms used in subpart A of this part which were issued under section 
7(g)(3) of the Fair Labor Standards Act. The purpose

[[Page 254]]

of section 7(g)(3) of the Act, and subpart A of this part, is to provide 
an exception from the requirements of computing overtime pay at the 
regular rate, \1\ and to allow, under specific conditions, the use of an 
established ``basic'' rate \2\ instead. Basic rates are alternatives to 
the regular rate of pay under section 7(a), and their use is optional. 
The use of basic rates is principally intended to simplify bookkeeping 
and computation of overtime pay.
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    \1\ The regular rate is the average hourly earnings of an employee 
for a workweek. See Sec. Sec. 778.107 to 778.122 of this chapter on 
overtime compensation. Sections 7(g)(1) and 7(g)(2) of the Act permit 
overtime compensation to be computed, under specified conditions, at 
time and one-half the bona fide hourly or piece rate applicable to the 
work performed during the overtime hours. See Sec. Sec. 778.415 to 
778.421 of this chapter.
    \2\ The term ``basic'' rate as used in this part means the rate 
authorized under section 7(g)(3) of the Fair Labor Standards Act. Such a 
rate may be used to compute overtime compensation under the Walsh-Healey 
Public Contracts Act. (See Rulings and Interpretations No. 3. section 
42(e)(1)). However, the term ``basic'' rate in this part should not be 
confused with the more general use of the term in the Public Contracts 
Act to describe all rates which may be used to compute overtime 
compensation or the use of the term in any other statute.
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    (b) Section 7(g) of the Fair Labor Standards Act provides that an 
employer will comply with the overtime requirements of the Act if:

* * * pursuant to an agreement or understanding arrived at between the 
employer and the employee before performance of the work, the amount 
paid to the employee for the number of hours worked by him in such 
workweek in excess of the maximum workweek applicable to such employee 
under such subsection [7](a):

                                * * * * *

    (3) is computed at a rate not less than one and one-half times the 
rate established by such agreement or understanding as the basic rate to 
be used in computing overtime compensation thereunder: Provided, That 
the rate so established shall be authorized by regulation by the 
Secretary of Labor as being substantially equivalent to the average 
hourly earnings of the employee, exclusive of overtime premiums, in the 
particular work over a representative period of time; and if (i) the 
employee's average hourly earnings for the workweek exclusive of 
payments described in paragraphs (1) through (7) of subsection (e) are 
not less than the minimum hourly rate required by applicable law, and 
(ii) extra overtime compensation is properly computed and paid on other 
forms of additional pay required to be included in computing the regular 
rate.

[20 FR 5680, Aug. 6, 1955, as amended at 26 FR 7731, Aug. 18, 1961]

                      Requirements for a Basic Rate