Today’s FLSA Question: I am an overtime exempt battalion chief for a mid-sized municipal fire and medical department. I do not receive any FLSA overtime. Despite being overtime exempt, the city pays me and other exempt chiefs “straight time overtime” for additional shifts worked beyond the normal work schedule. This is paid at our normal hourly rate. It is not time and one-half. We do not receive any additional pay for calls that extend beyond the normal shift or required staff meetings. My question is two-fold; First, is this practice allowable under the FLSA? And second, my “straight time overtime” rate does not include longevity, medic pay, or other bonuses that are included in our firefighters’ regular rate of pay. Doesn’t the FLSA require those bonuses included in my pay as well?
Answer: The rules that govern whether public employers can properly classify senior fire officers as overtime exempt are long and complex. Additionally, these requirements are fact specific. Battalion chiefs in one city may be properly classified overtime exempt, while the battalion chiefs in a neighboring city are entitled to FLSA overtime. We cannot delve into that analysis and answer your question in a simple blog post. Therefore, for the sake of this question, we assume that you are properly classified as an overtime exempt “white-collar” executive employee. For more on whether fire officers can be classified as overtime exempt employees, click here.
The FLSA and Department of Labor (DOL) regulations contain strict requirements related to the way overtime exempt “white-collar” workers must be paid. Most importantly for this discussion, overtime exempt “white-collar” employees must be paid on a salary basis. The very definition of being paid a salary requires an employee to receive the same pay from week to week regardless of the number of hours worked and the quality of the work. However, it often surprises folks to learn that the FLSA allows employers pay overtime exempt “white-collar” employees extra money [in addition to the employee’s salary] for working extra hours without jeopardizing the exemption.
Department of Labor regulations related to this can be found at 29 CFR §541.604 and are entitled, Minimum guarantee plus extras:
(a) An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis. Thus, for example, an exempt employee guaranteed at least $684 each week paid on a salary basis may also receive additional compensation of a one percent commission on sales. An exempt employee also may receive a percentage of the sales or profits of the employer if the employment arrangement also includes a guarantee of at least $684 each week paid on a salary basis.
Similarly, the exemption is not lost if an exempt employee who is guaranteed at least $684 each week paid on a salary basis also receives additional compensation based on hours worked for work beyond the normal workweek. Such additional compensation may be paid on any basis (e.g., flat sum, bonus payment, straight-time hourly amount, time and one-half or any other basis), and may include paid time off.
Based on the above regulation there is no problem with your employer providing you extra pay for working additional hours beyond your normal work schedule while continuing to maintain your exempt overtime status. Also, as you can see, the extra compensation provided can be paid “on any basis.” Therefore, the rate of pay for working additional hours does not need to be based on or paid at the employee’s “regular rate of pay.”
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