OLR Bill Analysis

sHB 6670 (as amended by House "A")*

AN ACT CONCERNING THE CALCULATION OF OVERTIME PAYMENTS

SUMMARY:

Current law permits "variable rate" overtime for certain employees subject to overtime rules. This bill prohibits variable rate overtime for such employees (1) earning both salary and commission and (2) employed as delivery drivers or sales merchandisers.

When the commission potential is relatively small, variable rate overtime can produce a lower overtime rate the more hours an employee works. This is due to a calculation that spreads the total remuneration over all hours (including overtime) worked to determine the rate.

Such employees' overtime is calculated by dividing by the total remuneration (salary and commission) by the total weekly hours worked (including those above 40). This 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.

*House Amendment "A" narrows the prohibition on variable rate overtime so it only applies to those (1) employed as delivery drivers or sales merchandisers and (2) paid on a base salary and commission basis. It also strikes a provision that maintained the use of variable rate overtime for fixed-salary employees whose jobs require fluctuating work weeks.

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

The federal Fair Labor Standards Act allows a variable rate overtime calculation and types of overtime other than the standard time-and-a-half formula for certain employees who are subject to overtime rules (29 CFR 778. 114, 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