Court Opinion

ID: 4132913
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:31:50.291622+00
Date Added: 2024-06-11T14:33:54.662136
License: Public Domain

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.

                                      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 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