## THEATTORMEYGENERAI~ OF TEXAS
AUSTUV. T-s 78711

December 9. 1974

The Honorable Joe Allen, Chairman Committee onHouse 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 ofpayment 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 ofhourly rates ofpayment of overtime and other purposes. Since the 1974 amendments ofthe Fair Labor Standards Act, 29 Il.S.C. sections 201-219 (FLSA) extended the coverage ofthe Act tomost 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.

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2) The pay for any period less than one month is determined bymultiplying the daily rate (the monthly rate divided by the number ofcalendar days inthe month) by the number ofdays employed (including weekends). 3) The hourly rate is determined by dividing the daily rate bythe “number ofhours ofthe normal work day for the particular employment, but not less than eight hours. ” The result of such method is to compute hourly rates onthe basis of a 7day, 56hour work week The effect of such apolicy is to arrive at anhourly rate of $2.08 for an employee receiving $500 per month, while his hourly rate if determined ona five-day, 40 hour basis would be $2.89. Itis our opinion that the method set out inAttorney General Opinion M-850 (1971)is contrary tothe method required by the FLSA for the computation ofthe regular rate ofpay for overtime purposes. Itis well established that the proper method for the computation ofhourly wages from monthly salaries for overtime purposes is tomultiply the monthly salary by twelve to obtain theyearly rate, divide the yearly rate by 52 to obtain theweekly rate, a.nddivide the weekly rate by the number of contracted hours, ofemployment 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 nowwithin the coverage ofthe FLSA. Beginning onthe date that the FLSA became effective as to aparticular employee his hourly rate must be determined onthe basis established by the federal cases, a,tleast for overtime purposes. Attorney General Opinion M-850 is therefore overrxrled to the extent that itprovides amethod for computation ofhourly wages which conflicts with the requirements ofthe FLSA.

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Representative Allen also asks whether the method ofcomputation established inAttorney General Opinion M-850 (1971)is proper for computations other than overtime. Inthis 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 thehourly rate ofpay pursuant to the method discussed inAttorney General Opinion M-85C, these persons’ hourly rates are computed onthe basis ofa 56hour week rather than a 40 hour week. The M-850 calculation varies with the length of the month, butproduces an hourly wage rate which is approximately 72per cent ofthe 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 ofthe Legislature’s adoption ofa 40 hour week as the no-l work week, we do not believe it intended hourly employees to be paid ona basis which substantially and artificially reduces their rate of pay. In such a case the use ofthe formula advanced inAttorney General Opinion M-850 is unreasonable, inappropriate and contrary to the intent ofthe Legislature and should notbe used. Although the use ofthe methods of determining salary rates established by M-850 are often unreasonable, we cannot say that they a,reinvalid 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, 186S.W. 2d 273 (Tex. Civ. App. --Galveston 1945, writ ref’d. ); Attorney General Opinion O-6616 (1945). Itmay be that administrative agencies w’,ll be benefited by auaiform policy of determination of compensation rates to conform tothe procedures required by the FLSA. Certainly inthose 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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Commissioner Irwin additionally asks whether employees who work onaholiday are entitled to be reimbursed at straight time or time and ahalf for that work. The premium pay provisions of the FLSA apply only for work in excess of40 hours per week and do not require premium pay for work done onholidays. Of course, the Appropriations Act provides that any state employee who is required towork on aholiday is entitled to take compensating time off atatime mutually agreed toby the employer andthe employee. Acts. 1973, 63rd Leg., ch. 659, p. 1786, at p. 2199. SUMMARY

For purposes ofovertime pay state employees covered by the Fair Labor Standards Act must have their hourly rate ofpay computed by dividing the yearly salary be 52and then dividing the result by the number ofhours worked per week, which will usually be 40. The same’or similar formula should be used for determining hourly rates, andmay 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

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