Ask a Fair Labor Standards Act (FLSA) Lawyer: What is the “Regular Rate” of Pay?
As FLSA lawyers, we regularly receive questions about “regular rates” and how they impact and interact with employment, wages, and hours worked. In today’s post, we’re going to cover the basics, including how Gold Star Law can help you calculate regular rate of pay. If you have any questions, we encourage you to reach out to us via our contact page.
What is “regular rate”?
When an employee files a lawsuit to recover unpaid overtime, the amount the employee is owed is not always easy to determine. The Fair Labor Standards Act entitles non-exempt employees to at least one and one-half times their “regular rate of pay” for hours worked in excess of forty per week. Sometimes an employee has a set hourly rate that he or she is always paid, without variation. However, a “regular rate” can change on a weekly basis for some employees. “Regular rate” is an issue that is often litigated and often misunderstood by employers and even some attorneys.
According to the Fair Labor Standards Act:
The “regular rate”. The “regular rate” of pay under the Act cannot be left to a declaration by the parties as to what is to be treated as the regular rate for an employee; it must be drawn from what happens under the employment contract (Bay Ridge Operating Co. v. Aaron, 334 U.S. 446). The Supreme Court has described it as the hourly rate actually paid the employee for the normal, nonovertime workweek for which he is employed—an “actual fact” (Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419). Section 7(e) of the Act requires inclusion in the “regular rate” of “all remuneration for employment paid to, or on behalf of, the employee” except payments specifically excluded by paragraphs (1) through (7) of that subsection. (These seven types of payments, which are set forth in §778.200 and discussed in §§778.201 through 778.224, are hereafter referred to as “statutory exclusions.”) As stated by the Supreme Court in the Youngerman-Reynolds case cited above: “Once the parties have decided upon the amount of wages and the mode of payment the determination of the regular rate becomes a matter of mathematical computation, the result of which is unaffected by any designation of a contrary ‘regular rate’ in the wage contracts.”
29 CFR 778.108
Under the regulations, the “regular rate” as a matter of law is not what the employer says it is, but a number found each week by taking (almost) all of an employee’s pay for the week and dividing it by the hours worked in that week. When you are dealing with bonuses, different rates for different types of work, piece rate, or any other payments other than a constant hourly rate of pay, the regular rate can change every week.
If you have a potential unpaid overtime claim, make sure that you have a lawyer who understands how to calculate your regular rate under the Fair Labor Standards Act. If you only claim unpaid overtime damages based on your base hourly rate of pay, you could be leaving money on the table that you are owed. To learn more about computing regular rate or talk to a Gold Star Law employment law attorney about your unpaid overtime, contact us today.