[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: 29CFR548.302]

[Page 256-257]
 
                             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. 548.302  Average earnings for period other than a workweek.

    (a) Section 548.3(b) authorizes as an established basic rate: ``A 
rate per hour which is obtained by averaging the earnings, exclusive of 
payments described in paragraphs (1) through (7) of section 7(e) of the 
act, of the employee for all work performed during the workday or any 
other longer period not exceeding sixteen calendar days for which such 
average is regularly computed under the agreement or understanding. Such 
a rate may be used to compute overtime compensation for all the overtime 
hours worked by the employee during the particular period for which the 
earnings average is computed.''
    (b)(1) The ordinary method of computing overtime under the act is at 
the employee's regular rate of pay, obtained by averaging his hourly 
earnings for each workweek. Section 548.3(b) authorizes overtime to be 
computed on the basis of the employee's average hourly earnings for a 
period longer or shorter than a workweek. It permits the payment of 
overtime compensation on the basis of average hourly earnings for a day, 
a week, two weeks or any period up to 16 calendar days, if the period is 
established and agreed to with the employee prior to the performance of 
the work. \9\ The agreement or understanding may contemplate that the 
basic rate will be the average hourly earnings for a day or a specified 
number of days within the sixteen day limit, or it may provide that the 
basic rate will be the average hourly earnings for the period required 
to complete a specified job or jobs.
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    \9\ Averaging over periods in excess of 16 calendar days may in 
appropriate cases be authorized by the Administrator under Sec. 548.4.

    Example 1. An employee is employed on a piece-work basis with 
overtime after 8 hours a day and on Saturday. Ordinarily his overtime 
compensation would be computed by averaging his earnings for the entire 
workweek to arrive at the regular rate of pay and then computing the 
overtime compensation due. Under this subsection of the regulations the 
employer and the employee may agree to compute overtime on the basis of 
the average hourly earnings for each day. Similarly, in a situation 
involving a bi-weekly or a semi-monthly pay period the employer may find 
it convenient to compute overtime on the basis of the average hourly 
earnings for the bi-weekly or semi-monthly period. \10\
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    \10\ See Sec. 548.301 (c) for a discussion of the method of 
computing overtime for an employee paid on a semi-monthly basis.
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    Example 2. An employee, who normally would come within the forty 
hour provision of section 7(a) of the Act, is paid a fixed amount of 
money for the completion of each job. Each job takes 2 or 3 days to 
complete. Under the employment agreement, the employee is entitled to 
time and one-half an authorized basic rate for all hours worked in 
excess of forty in the workweek. The authorized basic rate is the 
employee's average hourly earnings for each job. Suppose he completes 
two jobs in a particular workweek and all his overtime hours are on job 
No. 2. The employee's average hourly earnings on job No. 2 may be used 
to compute his overtime pay.

    (2) In this connection it should be noted that although the basic 
rate is obtained by averaging earnings over a period other than a 
workweek the number of overtime hours under the act must be determined 
on a workweek basis.
    (c) In computing the basic rate under Sec. 548.3(b), the employer 
may exclude

[[Page 257]]

from the computation the payments which he could exclude in computing 
the ``regular'' rate of pay. \11\
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    \11\ See Sec. Sec. 778.200 through 778.225 of this chapter for an 
explanation of what payments may be excluded.

[20 FR 5681, Aug. 6, 1955, as amended at 26 FR 7731, Aug. 18, 1961]