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Calculating Call Waiting Bonuses and Premiums for Overtime Compensation Purposes

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Reviewed Date: May 04, 2017

Original Author: 
Hemsley, Sid
Date Created: 
Apr 10, 1996


Subjects:
Personnel--Compensation
Personnel--Fair Labor Standards Act
Personnel--Laws and regulations

Calculating Call Waiting Bonuses and Premiums for Overtime Compensation Purposes

Summary: 
MTAS was asked how call waiting bonuses and premiums are calculated for overtime compensation purposes under the FLSA.

Knowledgebase-Calculating Call Waiting Bonuses and Premiums for Overtime Compensation PurposesApril 10, 1996

Based on our telephone conversation, I think we agree that the following hypothetical reflects the current FLSA method of calculating call waiting bonuses or premiums:

An employee's hourly rate of pay is $8, he works 45 hours during the work period, and he receives a call waiting bonus or premium of $40 for that work period. His call waiting bonus or premium boosts his hourly pay for the purpose of overtime compensation for that work period by $1.00 to $9.00 an hour ($40÷40=$1.00; $8 + $1.00=$9). The result is that in addition to the call waiting bonus or premium of $40, he is entitled to overtime compensation during that work period for 5 hours at the rate of 1-1/2x$9x5 = $67.50. (Had he received no call waiting bonus or premium, he would have been entitled to overtime compensation during that work period for 5 hours at the rate of 1-1/2x$8x5=$60.)

Of course, that hypothetical is based on the assumption that the employee enjoys substantial freedom to pursue his own purposes during the period he is on call. If he does, only the time he actually works while he is on call is compensable. If he does not, all the time he spends on call is compensable.

Incidentally, I think we also agree that the same call waiting bonus or premium does not have the effect of increasing his hourly rate of pay for the purpose of overtime compensation except during the pay period the call waiting bonus or premium was intended to cover. If the $40 call waiting bonus or premium is intended to cover, say, 40 hour work period number 12, it has no effect on 40 hour work period numbers 11, 10, 9...., or 40 hour work period numbers 13, 14, 15.... Needless to say, that should clue municipalities not to award employees call waitingbonuses or premiums under any circumstances that suggest such bonuses or premiums cover a period backward or forward from the work period in question.

If we are not speaking off the same page with respect to call waiting bonuses and premiums, please let me know.

Sincerely,

Sidney D. Hemsley
Senior Law Consultant

SDH/


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