1. (a) An employee's regular rate is an hourly rate figured on a weekly basis. An employer is not required to hire an employee at an hourly rate. The employee may be paid by piece-rate, salary, commission, or other basis agreeable to the employer and employee. The employer shall convert the employee's compensation basis to an hourly rate to determine the employee's regular rate. An employer who pays an employee on a salary basis is not exempt from overtime pay requirements under this chapter. If an employee's work is not exempt from overtime pay requirements under this chapter and the employer pays the employee on a salary basis, the employer shall compensate the employee for overtime based on a written employment contract. The following provisions apply to an employee who is paid on a salary basis:

   1. (1) the employment contract must

      1. (A) be in writing;
      2. (B) set out the specific number of straight time and overtime hours the employee is expected to work each day and each week; and
      3. (C) establish a regular straight time hourly rate of pay and the appropriate overtime rate with respect to the salary to be paid to the employee and the number of hours to be worked by the employee; changes to the pay schedule of a salaried employee must conform to the provisions of AS 23.05.160;
   2. (2) if the employment contract does not establish a fixed number of daily and weekly hours that the salary is intended to compensate, the salary will be considered to be compensation for an eight-hour workday and 40-hour workweek; an employee's overtime rate and sick leave accrual will be computed on that basis.

2. (b) To compute a regular hourly rate for the purpose of determining the overtime rate and sick leave accrual for an employee who is paid other than hourly or by salary, or if the employee's rate of pay includes a bonus, the following provisions of 29 C.F.R. Part 778 apply:

   1. (1) for a pieceworker, the method set forth in 29 C.F.R. 778.111, revised as of May 5, 2011 and adopted by reference;

   2. (2) for an employee who works at two or more hourly rates,

      1. (A) not less than the rate applicable to the same work when performed during non overtime hours; or
      2. (B) the method set forth in 29 C.F.R. 778.115, revised as of January 26, 1968, and adopted by reference;
   3. (3) for an employee who receives wages in a form other than cash, the method set forth in 29 C.F.R. 778.116, revised as of January 23, 1981, and adopted by reference;
   4. (4) for an employee who receives a commission, the method set forth in 29 C.F.R. 778.117 - 778.122, revised as of January 23, 1981, and adopted by reference;
   5. (5) for an employee who receives a bonus, the method set forth in 29 C.F.R. 778.208 - 778.215, revised as of January 5, 2020, and adopted by reference.
3. (c) To compute computing an employee's hours for the purpose of determining the employee's overtime rate and sick leave accrual, the employer shall count the hours worked by the employee during that week.

4. (d) The following compensation methods do not satisfy the payment of overtime provisions under AS 23.10.060:

   1. (1) a guaranteed weekly pay for variable hours plan ("Belo" contract) established under sec. 7(f) of the Fair Labor Standards Act of 1938, as amended (29 U.S.C. 207(f) as implemented in 29 C.F.R. 778.402 - 778.414);
   2. (2) compensatory time (comp time) off instead of monetary compensation for overtime;
   3. (3) a flex-time or flexitime plan established under 29 C.F.R. 778.114 that provides a fixed salary for fluctuating hours up to a predetermined maximum number of hours in a workweek.

5. (e) Except as provided under 8 AAC 15.908(c), an employer shall compensate an employee for overtime based on a written employment contract if the employee is paid on a daily rate and whose work is not exempt from overtime pay requirements under AS 23.10.055 or 23.10.060(d). The following provisions apply to an employee paid on a daily rate:

   1. (1) if the employee's daily rate is compensation for a set number of hours in a day, the contract must set out the employee's applicable straight time and overtime rates; if the contract does not set out the employee's hours of work, the daily rate will be considered to be compensation for an eight-hour workday; the employee's overtime rate and sick leave accrual will be computed on that basis;

   2. (2) if the employee works overtime hours that are not covered by the daily rate established in the contract, the employer shall adiust the employee's pay at the overtime rate for

      1. (A) hours worked in excess of eight hours in one day; and
      2. (B) all hours worked on days worked after 40 straight time hours in a week.

(Eff. 12/9/78, Register 68; am 9/28/85, Register 95; am 4/29/99, Register 150; am 3/2/2008, Register 185; am 8/12/2018, Register 227)

Authority: AS 23.05.060, AS 23.10.060, AS 23.10.085, AS 23.10.095