On September 30, 2025, the Department of Labor's (DOL) Wage
and Hour Division issued a new opinion
letter clarifying that "emergency pay" premiums provided to
firefighters and other non-exempt employees during declared emergencies must be
included in the regular rate of pay when calculating overtime premiums under
the Fair Labor Standards Act (FLSA).
The DOL reviewed a request from a firefighter/paramedic in a
Texas municipality, who inquired about the city's emergency pay policy. This
policy provides a 50% premium (half the employee's base hourly rate) for every
hour worked during declared emergency periods. The firefighter believed that
this payment should be included in overtime calculations and sought
confirmation from the DOL.
The DOL concluded that the
emergency pay does not qualify for any statutory exclusion from the regular
rate under Section 7(e) of the FLSA. Specifically, the payment fails the
three-prong test for discretionary bonuses because, (1) once the emergency work
is performed, the employer has no discretion whether to pay, (2) the amount is
predetermined (50% of base rate), not discretionary, and (3) the amount is determined
before the work is performed, not "at or near the end of the period."
The payment doesn't qualify as an exclusion from overtime under
Sections 7(e) because the payment is not contingent on working beyond a
specified number of hours (e.g., 8 hours/day or 40 hours/week), working on
weekends, holidays, or special days, nor working outside regular hours or
workdays. Rather, the emergency pay is a premium for hazardous or arduous work
conditions, similar to night shift differential, which federal regulations
specifically state must be included in the regular rate.
The DOL provided this example for proper overtime
calculation:
An employee earning $20/hour works 50 hours in a week, with
20 of those hours during an emergency period:
Straight-time earnings: (50 hours
× $20) + (20 hours × $10 emergency premium) = $1,200
Regular rate: $1,200 ÷ 50 hours =
$24/hour
Overtime premium: $24 × 0.5 =
$12/hour for 10 OT hours = $120
Total compensation: $1200 regular
rate + $120 overtime premium = $1,320
Public sector employers with
similar emergency pay policies should determine whether emergency, hazard, or
other conditional premium pay is being properly included in regular rate
calculations. Employers should also consider whether retroactive adjustments
may be needed.
The opinion applies specifically to the facts presented in
the letter, but provides important guidance for employers providing premium pay
for working during emergencies, hazardous conditions, or other special
circumstances that don't fit within the narrow FLSA exclusions.
On September 30, 2025, the Department of Labor's (DOL) Wage
and Hour Division issued a new opinion
letter clarifying that "emergency pay" premiums provided to
firefighters and other non-exempt employees during declared emergencies must be
included in the regular rate of pay when calculating overtime premiums under
the Fair Labor Standards Act (FLSA).
The DOL reviewed a request from a firefighter/paramedic in a
Texas municipality, who inquired about the city's emergency pay policy. This
policy provides a 50% premium (half the employee's base hourly rate) for every
hour worked during declared emergency periods. The firefighter believed that
this payment should be included in overtime calculations and sought
confirmation from the DOL.
The DOL concluded that the
emergency pay does not qualify for any statutory exclusion from the regular
rate under Section 7(e) of the FLSA. Specifically, the payment fails the
three-prong test for discretionary bonuses because, (1) once the emergency work
is performed, the employer has no discretion whether to pay, (2) the amount is
predetermined (50% of base rate), not discretionary, and (3) the amount is determined
before the work is performed, not "at or near the end of the period."
The payment doesn't qualify as an exclusion from overtime under
Sections 7(e) because the payment is not contingent on working beyond a
specified number of hours (e.g., 8 hours/day or 40 hours/week), working on
weekends, holidays, or special days, nor working outside regular hours or
workdays. Rather, the emergency pay is a premium for hazardous or arduous work
conditions, similar to night shift differential, which federal regulations
specifically state must be included in the regular rate.
The DOL provided this example for proper overtime
calculation:
An employee earning $20/hour works 50 hours in a week, with
20 of those hours during an emergency period:
Straight-time earnings: (50 hours
× $20) + (20 hours × $10 emergency premium) = $1,200
Regular rate: $1,200 ÷ 50 hours =
$24/hour
Overtime premium: $24 × 0.5 =
$12/hour for 10 OT hours = $120
Total compensation: $1200 regular
rate + $120 overtime premium = $1,320
Public sector employers with
similar emergency pay policies should determine whether emergency, hazard, or
other conditional premium pay is being properly included in regular rate
calculations. Employers should also consider whether retroactive adjustments
may be needed.
The opinion applies specifically to the facts presented in
the letter, but provides important guidance for employers providing premium pay
for working during emergencies, hazardous conditions, or other special
circumstances that don't fit within the narrow FLSA exclusions.
