LABOR LAW-FAIR LABOR STANDARDS ACT-DETERMINATION OF REGULAR RATE FOR COMPUTATION OF OVERTIME PAY

Previous to the enactment of the Fair Labor Standards Act, respondent had paid its employees monthly salaries for work schedules which fluctuated from week to week according to the demands of business. After the effective date of the act, respondent sought to comply with section 7 (a), requiring the payment of one. and one half times the regular rate of compensation for hours worked above the statutory maximum, by adopting new employment contracts which guaranteed weekly salaries equivalent to the former compensation and fixed an hourly rate which, multiplied by the maximum hours permitted by the act and by one and a half times the normal number of overtime hours, would approximate the guaranteed figure. If in any week an employee should work more hours than would be covered by the guarantee, the additional hours were to be compensated at time and a half the basic rate. In a suit filed by the Administrator of the Wage and Hour Division to enjoin respondent\u27s use of its contracts on the theory that the stated hourly rate could not qualify as the regular rate for the purposes of the overtime provisions of the act, the federal district court dismissed the complaint on the authority of Walling v . A. H. Belo Corp. The circuit court of appeals affirmed. On certiorari to the Supreme Court, held, affirmed. The regular rate as determined in respondent\u27s contracts satisfies the requirements of section 7 (a). Justices Murphy and Black dissented. Walling v. Halliburton Oil Well Cementing Co., (U.S. 1947) 67 S. Ct. 1056