Any rate of pay exceeding the statutory minimum that the parties to an employment agreement decide upon is permissible as far as the Federal Fair Labor Standards Act 1 is concerned. In general, too, the mode of payment is uncontrolled by the statute. Does this freedom of contract include the power to make arrangements with respect to the agreed-upon compensation which will be legally effective in determining liability under the statute? This question indicates in broad scope the most persistent controversy centering around the term "regular rate of pay," which, although undefined in the Act, is the required basis for the computation of statutory overtime payments. That such a controversy on a matter of basic principle should continue to rage more than ten years after the effective date of FLSA suggests the existence of either confusion in court interpretations or dissatisfaction with such clear pronouncements as have been made. It may be fairly said that, at times, each of these situations has obtained. Dissatisfaction was the prevalent note after the United States Supreme Court's action at the end of its last term in Bay Ridge Operating Co. v. Aaron, the case involving the New York longshoremen. As this is written, it remains to be seen whether this will result in a general legislative modification of the precisely-stated definitions set forth in that decision.
Paul H. Sanders,
Overtime Pay Under the Fair Labor Standards Act,
2 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol2/iss3/11