workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed." 29 U.S.C. § 207(a)(1). There are two components to this obligation: first, the so-called "regular rate" must be calculated; second, the regular rate must then be used to calculate overtime compensation. The present dispute implicates both of these components.
The Regulations provide in terms even a layman could understand that "the regular hourly rate of pay of an employee is determined by dividing his total remuneration for employment (except statutory exclusions) in any workweek by the total number of hours actually worked by him in that workweek for which such compensation was paid." 29 C.F.R. § 778.109; see also 29 U.S.C. § 207(e) (regular rate with seven exclusions is "deemed to include all remuneration for employment paid to, or on behalf of, the employee"). The District has admitted and the Court has held that certain forms of "premium pay" must be included in the regular rate. Harrison v. District of Columbia, 674 F. Supp. 34 (D.D.C. 1987). The present dispute arises from the District's contention that it does not have to include such premium pay in the calculation of both the regular rate and the overtime rate.
The District's contention, however, is simply wrong.
Under FLSA, the overtime rate cannot be divorced from the regular rate, as the District suggests. The overtime rate is simply a multiple of the regular rate. Plaintiffs are thus perfectly correct in their contention that premium pay is factored into both the regular rate and the overtime rate. The District's apparent concern with "double counting" is specifically addressed in the Act. That is, certain forms of premiums, such as, most obviously, an overtime premium, are excluded from the calculation of the regular rate to avoid counting them twice. See 29 U.S.C. § 207(e)(5). Other premiums, however, such as those involved here, are not excluded from the regular rate, and double counting is therefore not an issue. Moreover, once the regular rate is determined, the calculation of overtime compensation becomes a matter of basic arithmetic.
The parties' most recent submissions indicate that they agree on this basic arithmetic. Nonetheless, at argument both counsel insisted that the method of calculation adopted by the District will not always lead to the same result in cases where premium pay is not paid for all the hours worked. In the Court's analysis, however, both sides are wrong in this regard. As demonstrated below, it makes no difference how much and for what hours a premium is paid, as long as it is properly added into the regular rate.
Both parties cite to an example used in the Regulations. That example, captioned "Hourly rate and bonus," provides as follows:
If the employee receives, in addition to his earnings at the hourly rate [assumed to be $ 6], a production bonus of $ 9.20, the regular hourly rate of pay is $ 6.20 an hour (46 hours at $ 6 yields $ 276; the addition of the $ 9.20 bonus makes a total of $ 285.20; this total divided by 46 hours yields a ["regular"] rate of $ 6.20). The employee is then entitled to be paid a total wage of $ 303.80 for 46 hours (46 hours at $ 6.20 plus 6 hours at $ 3.10, or 40 hours at $ 6.20 plus 6 hours at $ 9.30).