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. 

Commissioner for Rehabilitation 

Texas-Rehabilitation Commission 

1600 West 38th Street 

Austin, Texas 78731 

Opinion No. H- 465 

Re: Method of computing an 

hourly rate of payment of 

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 determined 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 requirements 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 computations 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 approximately 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 calculation 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. 

po 2130 
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 provides 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