The US Department of Labor (DOL) recently issued non-Administrator signed Opinion Letter FLSA2008-12NA. 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). Unlike signed Opinion Letters, unsigned Opinion Letters do not “provide a potential good faith reliance defense for violations of the FLSA.”

This Opinion Letter discusses whether a company that employs dump truck drivers uses an overtime calculation method in compliance with the FLSA. The company pays each dump truck driver a commission equal to 27% of the gross revenue that the company receives for the materials delivered by that driver. The company pays overtime based on one-half of the commission divided by the hours worked times the number of hours worked in excess of forty in that week.

For example, assume a driver delivers material that produces $5000 of gross revenue for the company and works fifty-four hours in that workweek. The driver would be entitled to commission compensation of $1350 ($5000 X 27%). This would work out to a regular rate of pay of $25 per hour ($1350 ÷ 54 hours). The driver would also be entitled, therefore, to $175 of overtime compensation ($25 per hour X 14 hours (hours worked in excess of forty) ÷ 2 (overtime premium rate)).

The DOL confirmed that this method of computing overtime pay was proper under 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.