[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: 29CFR778.204]

[Page 416-417]
 
                             TITLE 29--LABOR
 
         CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR
 
PART 778_OVERTIME COMPENSATION--Table of Contents
 
    Subpart C_Payments That May Be Excluded From the ``Regular Rate''
 
Sec. 778.204  ``Clock pattern'' premium pay.

    (a) Overtime premiums under section 7(e)(7). Where a collective 
bargaining agreement or other applicable employment contract in good 
faith establishes certain hours of the day as the basic, normal, or 
regular workday (not exceeding 8 hours) or workweek (not exceeding the 
maximum hours standard applicable under section 7(a)) and provides for 
the payment of a premium rate for work outside such hours, the extra 
compensation provided by such premium rate will be treated as an 
overtime premium if the premium rate is not less than one and one-half 
times the rate established in good faith by the contract or agreement 
for like work performed during the basic, normal or regular workday or 
workweek.
    (b) Premiums for hours outside established working hours. To qualify 
as an overtime premium under section 7(e)(7) the premium must be paid 
because the work was performed during hours ``outside of the hours 
established * * * as the basic * * * workday or workweek'' and not for 
some other reason. Thus, if the basic workday is established in good 
faith as the hours from 8 a.m. to 5 p.m. a premium of time and one-half 
paid for hours between 5 p.m. and 8 a.m. would qualify as an overtime 
premium. However, where the contract does not provide for the payment of 
a premium except for work between midnight and 6 a.m. the premium would 
not qualify under this section since it is not a premium paid for work 
outside the established workday but only for certain special hours 
outside the established workday, in most instances because they are 
undesirable hours. Similarly, where payments of premium rates for work 
are made after 5 p.m. only if the employee has not had a meal period or 
rest period, they are not

[[Page 417]]

regarded as overtime premiums; they are premiums paid because of 
undesirable working conditions.
    (c) Payment in pursuance of agreement. Premiums of the type which 
section 7(e)(7) authorizes to be treated as overtime premiums must be 
paid ``in pursuance of an applicable employment contract or collective 
bargaining agreement,'' and the rates of pay and the daily and weekly 
work periods referred to must be established in good faith by such 
contract or agreement. Although as a general rule a collective 
bargaining agreement is a formal agreement which has been reduced to 
writing, an employment contract for purposes of section 7(e)(7) may be 
either written or oral. Where there is a written employment contract and 
the practices of the parties differ from its provisions, it must be 
determined whether the practices of the parties have modified the 
contract. If the practices of the parties have modified the written 
provisions of the contract, the provisions of the contract as modified 
by the practices of the parties will be controlling in determining 
whether the requirements of section 7(e)(7) are satisfied. The 
determination as to the existence of the requisite provisions in an 
applicable oral employment contract will necessarily be based on all the 
facts, including those showing the terms of the oral contract and the 
actual employment and pay practices thereunder.