Day rate, piece rate and salary: what labour departments say about overtime and minimum pay

This page reports what the official source says. It is not legal advice: ask the office named here. The sources describe how the rules work for employees the law covers and does not exempt. They do not say whether any worker is covered, and they say nothing about what a given crew is owed. Minimum wages are on the guide to minimum pay rules.

United States: the rule text

The Fair Labor Standards Act regulations are printed at 29 CFR Part 778. Section 778.109 says the regular rate under the Act is a rate per hour, and that the Act does not require an employer to pay by the hour. It says earnings may be determined on a piece-rate, salary, commission or other basis, and that in that case the overtime due is computed on the hourly rate derived from them. It says the regular hourly rate is found by dividing total remuneration for employment in the workweek, except statutory exclusions, by the total hours actually worked in that week for which the pay was made.

Three of the sections that follow cover the pay bases a crew meets:

Section 778.111, pieceworkers. It says the regular rate is worked out by adding the week's earnings from piece rates and other sources, such as production bonuses and sums paid for waiting time, and dividing by the hours worked in the week. It says the pieceworker is then entitled to extra pay of one half of that regular rate for each hour over 40 in the week, because straight-time pay has already been received for all hours.
Section 778.112, day rates and job rates. It says that if an employee gets one flat sum for a day or for a particular job, whatever the hours, and no other pay for services, the regular rate is found by totaling all the sums received at those rates in the workweek and dividing by the total hours actually worked. It says the employee is then entitled to extra half-time pay at that rate for all hours over 40 in the workweek.
Section 778.113, salaried employees. It says that for an employee on a weekly salary the regular hourly rate is the salary divided by the number of hours the salary is intended to compensate, and that a salary covering a longer period is reduced to its workweek equivalent.

Two sections set the frame. Section 778.103 says that if an employee is covered by the Act and not exempt from its overtime requirements, the employer totals all the hours worked in that workweek, even where two or more unrelated job assignments were performed. Section 778.104 says each workweek stands alone: the Act counts hours one week at a time and does not permit averaging over two or more weeks, and the rule applies to pieceworkers and commission employees. Section 778.107 says overtime is paid at not less than one and one-half times the regular rate, and that the regular rate may in no event be less than the statutory minimum.

United States: the Department of Labor fact sheet

Wage and Hour Division Fact Sheet #23, revised October 2019, repeats the same method in plain terms. It says earnings may be determined on a piece-rate, salary, commission or other basis, and that the overtime due must be computed on the average hourly rate derived from those earnings. It says that a fixed salary for a regular workweek longer than 40 hours does not discharge the Act's obligations, and it works an example that divides the salary by the hours it covers. The fact sheet does not mention day rates.

Ontario

The Ontario government's guide to the Employment Standards Act says that for most employees overtime begins after 44 hours in a work week, and is paid at 1½ times the regular rate. It says that unless a contract or collective agreement says otherwise, there is no overtime on a daily basis, and that overtime is calculated weekly or over a longer period under an averaging agreement. On pay bases, the guide gives separate examples:

Fixed salary: if hours change from day to day but weekly pay stays the same, the salary compensates all non-overtime hours up to and including 44 a week, and overtime is owed after 44 hours.
Fluctuating salary: where set hours carry a salary adjusted for variations in those hours, the guide treats the employee as receiving a wage based on the number of hours worked.
Piecework and commission: the guide says some employees are paid by the number of pieces completed or by commission rather than by hours. It says they must be paid at least the minimum wage for all hours worked and are usually entitled to overtime if they work more than 44 hours a week. It says some commission employees are exempt from overtime.

The guide also lists exceptions: many jobs are exempt from the overtime provisions, and others have a threshold above 44 hours. It points to a special rule tool for those.

At a glance

Pay basis	United States, as the text words it	Ontario, as the guide words it
Day rate or job rate	Total the day or job sums in the week, divide by hours worked; extra half-time over 40 hours	Not described as a separate basis
Piece rate	Add all earnings in the week, divide by hours worked; extra half-time over 40 hours	Usually entitled to overtime over 44 hours; minimum wage for all hours
Fixed salary	Salary divided by the hours it is intended to cover	Covers hours up to and including 44; overtime after
Averaging weeks	Not permitted; each week stands alone	Only under an averaging agreement