Untitled Texas Attorney General Opinion ( 1974 )

THEATTORMEYGENERAI~
OF TEXAS
AUSTUV. T-s 78711
December 9. 1974
The Honorable Joe Allen, Chairman
Committee on House Administration
House of Representatives
Austin, Texas
The Honorable Jess M. Irwin, Jr. Opinion No. H- 465
Commissioner for Rehabilitation
Texas-Rehabilitation Commission Re: Method of computing an
1600 West 38th Street hourly rate of payment of
Austin, Texas 78731 state employees under the
Fair Labor Standards Act
The Honorable Jackie St. Clair
Commissioner, Texas Department
of Labor and Standards
Box 12157, Capitol Station
Austin, Texas 78711
Gentlemen:
You have requested our opinion concerning the method of computation
of hourly rates of payment of overtime and other purposes.
Since the 1974 amendments of the Fair Labor Standards Act, 29 Il. S. C.
sections 201-219 (FLSA) extended the coverage of the Act to most state
employees, [Attorney General Opinion H-382 (1974)], you have asked
whether the methods of computation established by Attorney General
Opinion M-850 (1971) are correct.
Attorney General Opinion M-850 (1971) established the following methods
for computing wages:
1) The monthly salary is determined by dividing the
annual salary by twelve.
p. 2128
Page 2 (H-465)
2) The pay for any period less than one month is
determined by multiplying the daily rate (the
monthly rate divided by the number of calendar
days in the month) by the number of days employed
(including weekends).
3) The hourly rate is determined by dividing the
daily rate by the “number of hours of the normal
work day for the particular employment, but not
less than eight hours. ”
The result of such method is to compute hourly rates on the basis of
a 7 day, 56 hour work week
The effect of such a policy is to arrive at an hourly rate of $2.08 for
an employee receiving $500 per month, while his hourly rate if deter-
mined on a five-day, 40 hour basis would be $2.89.
It is our opinion that the method set out in Attorney General Opinion
M-850 (1971) is contrary to the method required by the FLSA for the
computation of the regular rate of pay for overtime purposes. It is well
established that the proper method for the computation of hourly wages
from monthly salaries for overtime purposes is to multiply the monthly
salary by twelve to obtain the yearly rate, divide the yearly rate by 52
to obtain the weekly rate, a.nd divide the weekly rate by the number of
contracted hours, of employment per week, usually forty, to obtain the
hourly rate. Bay Ridge Operating Co., Inc. v1 Aaron, 334 U.S. 446,
464 (1948); Triple “AAA” Company, Inc., V* Wirtz, 378 F. 2d 884 (10th
Cir. 1967), cert. denied 389 U.S. 959 (1967); Patsy Oil & Gas Co., v.
Roberts, 132 F. 2d 826 (10th Cir. 1943); Seneca Coal & Coke Co. v. Loftin,
136 F. 2d 359 (10th Cir. 1943). cert, denied, 320 U.S. 772 (1943); 29 C. F. R.
§ 778.113!1973).
As previously noted, most state employees are now within the coverage
of the FLSA. Beginning on the date that the FLSA became effective as to
a particular employee his hourly rate must be determined on the basis
established by the federal cases, a,t least for overtime purposes. Attorney
General Opinion M-850 is therefore overrxrled to the extent that it provides
a method for computation of hourly wages which conflicts with the require-
ments of the FLSA.
pa 2129
Page 3 (H-465)
Representative Allen also asks whether the method of computation
established in Attorney General Opinion M-850 (1971) is proper for com-
putations other than overtime.
In this regard Commissioner St. Clair has given us examples of
persons hired for part-time assignments as inspectors who are paid on
an hourly basis. Since the Comptroller computes the hourly rate of pay
pursuant to the method discussed in Attorney General Opinion M-85C,
these persons’ hourly rates are computed on the basis of a 56 hour week
rather than a 40 hour week. The M-850 calculation varies with the
length of the month, but produces an hourly wage rate which is approxi-
mately 72 per cent of the rate resulting from a determination under the
FLSA or other 40 hour per week formula. For an employee working
at or close to the minimum wage, this formula could result in a calcula-
tion which would be below such minimum.
The Legislature has clearly indicated that the normal work week is
40 hours per week. V. T. C. S. art. 5165a; General Appropriations Bill,
Acts 1973, 63rd Leg., ch. 659, art. 5, sec. 16(b), p.1786, at 2199. In
light of the Legislature’s adoption of a 40 hour week as the no-l work
week, we do not believe it intended hourly employees to be paid on a
basis which substantially and artificially reduces their rate of pay. In
such a case the use of the formula advanced in Attorney General Opinion
M-850 is unreasonable, inappropriate and contrary to the intent of the
Legislature and should not be used.
Although the use of the methods of determining salary rates established
by M-850 are often unreasonable, we cannot say that they a,re invalid in
every instance. As an example: a similar procedure is required by statute
for computing the compensation. of special judges. V. T. C. S. art. 6821;
Markwell v. Galveston County, 186 S. W. 2d 273 (Tex. Civ. App. --Galveston
1945, writ ref’d. ); Attorney General Opinion O-6616 (1945). It may be that
administrative agencies w’,ll be benefited by a uaiform policy of determination
of compensation rates to conform to the procedures required by the FLSA.
Certainly in those cases where statutes do not require otherwise, we
believe the Comptroller would be able to use the FLSA formula for all
purposes. He must use that formula when computing entitlements under
the FLSA.
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Page 4 (H-465)
Commissioner Irwin additionally asks whether employees who work
on a holiday are entitled to be reimbursed at straight time or time and
a half for that work. The premium pay provisions of the FLSA apply
only for work in excess of 40 hours per week and do not require premium
pay for work done on holidays. Of course, the Appropriations Act pro-
vides that any state employee who is required to work on a holiday is
entitled to take compensating time off at a time mutually agreed to by
the employer and the employee. Acts. 1973, 63rd Leg., ch. 659, p. 1786,
at p. 2199.
SUMMARY
For purposes of overtime pay state employees
covered by the Fair Labor Standards Act must have
their hourly rate of pay computed by dividing the
yearly salary be 52 and then dividing the result by
the number of hours worked per week, which will
usually be 40. The same’or similar formula should
be used for determining hourly rates, and may be
used for other purposes unless a statute requires
otherwise. See, u, V. T. C.S. art. 6821.
nVery truly yours,
(/ Attorney General of Texas
APPROVED:
C. ROBERT HEATH, Chairman
Opinion Committee
po 2131