Today’s FLSA Question: I am a full-time paid firefighter that works a 56-hour average workweek utilizing a 48/96 schedule. My department calculates my regular rate and overtime rate by taking my annual salary, including stipends and longevity, and dividing that by 2,912. According to human resources, that is the proper method since that is the number of hours that our firefighters are scheduled to work in a year. However, a neighboring department uses 2,756 as their divisor. Even though my department’s annual salaries are a little higher than our neighbors, their firefighters are earning much more money than us when including overtime pay. This doesn’t seem right to me. Does the FLSA require that my city utilize 2,912 as the divisor? Why would the neighboring department use 2,756 and pay more than required?
Answer: This is a very common and very advanced question. Let’s start by addressing your two questions. First, the FLSA does not require fire departments utilize 2,912 as the divisor when determining a firefighters’ regular rate of pay from a salary. Second, the FLSA also does not prohibit using 2,756 as the divisor. Additionally, there could be a number reasons why your neighboring community utilizes a lower divisor when calculating its firefighters’ regular rate. We will get to some of those possibilities in a minute.
However, there is much more to your question than what the FLSA requires. The bigger question is how to determine a firefighter’s regular from a salary? In order to get a better understanding of that question, let’s take a closer look at some of the underlying FLSA and Department of Labor (DOL) rules related to properly calculating the regular rate from a salary.
First, the FLSA does not require that employees be paid by the hour. In fact, many employees are not paid by the hour. Many employees are paid a salary in lieu of being paid hourly. That salary can compensate the employee for a single day, week, month, or even the entire year. In addition to receiving a salary, many employees are also eligible for FLSA overtime when they work over the maximum hour threshold for each workweek. For non-firefighters, that would be all hours worked in excess of 40 every workweek.
Second, even though the FLSA does not require employees be paid by the hour, the FLSA requires that overtime be paid by the hour. All FLSA overtime must be paid at a rate not less than time and one-half of the employee’s regular rate, which is an hourly rate. This creates a unique challenge for overtime eligible employees that are paid a salary. The challenge lies in properly calculating an employee’s regular rate—the rate of pay from which all FLSA overtime must be based—when that employee is paid a salary.
Department of Labor (DOL) regulations and case law tell us that to properly calculate a salaried employee’s regular rate, the employer must divide the salary by the number of hours the salary is intended to compensate the employee. Here is a simple non-firefighter example:
Employee X is paid a weekly salary or $800. The salary is intended to compensate the employee for 40 hours per week. Employee X’s regular rate is $20 per week. $800/40 hours equals $20 per hour. Employee X’s overtime rate is $30 per hour [1.5 times the regular rate].
The same rationale applies when the salary is intended to compensate an employee for more than 40 hours. Here is a more complex non-firefighter example:
Employee Y is paid a weekly salary of $800. The salary is intended to compensate the employee for 48 hours per week. Employee Y’s regular rate is $16.66 per week. $800/48 hours equals $16.66 per hour. Employee Y’s overtime rate is $24.99 per hour [1.5 times the regular rate].
Now let’s apply these basic examples to your specific question.
Your question states that you work a 56-hour average workweek, and your regular rate is based off of your scheduled hours [i.e., the amount the salary is intended to compensate] and your annual salary. As a general rule, a firefighter that works an average of 56 hours per week will work 2,912 hours per year. Therefore, utilizing a firefighter’s annual salary [including wage augments required by the FLSA] and dividing that salary by 2,912 hours is an acceptable method of calculating the regular rate under the FLSA, DOL regulations and the vast majority of legal precedent.
This is premised on a clear mutual understanding between the parties that this is how the regular rate is to be calculated. In other words, the annual salary is intended to compensate the firefighters for 56 hours per week, or 2,912 hour per year. This clear and mutual understanding can take the form of a collective bargaining agreement, city policy, or individual employment agreements. Now, notice the line “vast majority of legal precedent” above? Unfortunately, there are a couple of jurisdictions that take a slightly different approach to answer the same question. That is why it is extremely important to run these questions by a local attorney that is familiar with the FLSA and how it applies to firefighters and other first responders.
Let’s move onto your second question. Why would a neighboring jurisdiction’s fire department utilize 2,756 annual hours to calculate its firefighter’s regular rate. In that situation, it is assumed the salary is only intended to compensate those firefighters for 53 hours per week. Fifty-three hours per week multiplied by 52 weeks equals 2,756 annual hours. There could be several reasons for this. The firefighters could receive a Kelly Day every so often that reduces the number of hours the salary is intended to compensate. The fire department may have opted to exceed the FLSA’s basic requirements for paying firefighters. Either of these possible reasons are acceptable under the FLSA.
What is important, and what cannot be under-emphasized is that there is a clear mutual understanding between the employer and employees of exactly how many hours the employee’s salary is intended to compensate and how the employee’s regular rate is determined.
Do you have questions about the proper calculation of the regular rate? Time is running out to register for the live webinar Advanced FLSA: Calculating Regular Rate for Firefighters and other First Responders – January 5, 2023. Please consider joining us.