August 02, 2008
US Department of Labor Issues Opinion Letter on Minimum Wage, Pay Periods
Filed under: News
Vision Payroll

The US Department of Labor recently issued Administrator signed Opinion Letter FLSA2008-5. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA). This Opinion Letter discusses whether a school district can add an extra week to a pay period about five times over a twenty-eight year period and still comply with the Fair Labor Standards Act. For example, an employee who earns $13 per hour is paid a bi-weekly salary of $1,040 ($13 per hour X 40 hours per week X 52 weeks per year ÷ 26 pay periods per year). Non-exempt employees are paid overtime for hours worked in excess of forty in any particular week. Since there is a day or two more than fifty-two weeks in every year, the district would sometimes have twenty-seven pay periods. To maintain its policy of twenty-six pay periods per year, the district adds a third week to one pay period, but still pays the same salary. The employee in the example above would still receive $1,040 for a three-week period. Since the rate of pay is $8.67 for the three-week period, ($1,040 ÷ 120 [40 hours per week X 3 weeks]), the pay rate exceeds federal minimum wage. Furthermore, since non-exempt employees were paid overtime for hours worked in excess of forty in any of the three weeks, the policy did not violate the FLSA. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.


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