OLR Bill Analysis

sHB 6670

AN ACT CONCERNING THE CALCULATION OF OVERTIME PAYMENTS

SUMMARY:

Current law permits "variable rate" overtime for certain employees who are subject to overtime rules. This bill prohibits variable rate overtime for such employees earning both salary and commission. The bill only allows variable rate overtime for employees on a fixed salary whose jobs require fluctuating hours, as permitted by a federal exception.

In situations where the commission potential is relatively small, variable rate overtime can have the effect of producing a lower overtime rate the more hours an employee works. This is due to a calculation that spreads the total remuneration over all hours worked (including overtime hours) to determine the overtime rate.

Such employees' overtime is calculated by dividing the total weekly hours worked (including those above 40) into the total remuneration (salary and commission). Then that hourly rate is divided by two to produce the variable overtime rate. Any hours worked in excess of 40 are multiplied by this variable-rate overtime figure to determine the overtime pay for the employee.

EFFECTIVE DATE: October 1, 2003

BACKGROUND

Standard Overtime

State and federal laws require that, for all employees subject to overtime rules, the overtime hourly rate is one and a half times the employee's regular rate. The regular rate is 1/40th of the employee's weekly remuneration (total pay). The law exempts some employees, such as salespeople and executives, from overtime requirements.

Federal Law and Non-Standard Overtime

A provision of the federal Fair Labor Standards Act allows a variable rate calculation for salaried, non-exempt employees with a single source of remuneration and fluctuating work weeks (29 CFR 778. 114). There are other situations where the act permits overtime that is not the standard time-and-a-half formula for employees who are not exempt from overtime rules (29 CFR 778. 400, and 778. 415 through 421). But it also does not preempt stricter states laws, thus leaving it to the states to decide whether to prohibit or allow federally permitted types of non-standard overtime.

COMMITTEE ACTION

Labor and Public Employees Committee

Joint Favorable Substitute

Yea

14

Nay

0