FLSA2025-4 — Addressing whether “emergency pay” provided to you and other firefighters in your city can be excluded from the regular rate of pay when calculating overtime premiums under section 7(e) of the FLSA

U.S. Department of Labor Wage and Hour Division
Washington, DC 20210

September 30, 2025
Dear Name*:
This letter responds to your request for an opinion addressing whether “emergency pay” provided
to you and other firefighters in your city can be excluded from the regular rate of pay when
calculating overtime premiums under section 7(e) of the Fair Labor Standards Act (FLSA) or,
alternatively, how to include this payment in the regular rate.
It is our opinion that, under the circumstances presented and limited to the specific facts set forth
in the request, the “emergency pay” is not excludable from the regular rate of pay because the fact
and amount of the payment are not within the sole discretion of the employer at or near the end of
the work period, and the pay does not otherwise fit within a statutory exclusion. Accordingly, the
employer at issue should include “emergency pay” earned for hours worked within the regular rate
for purposes of overtime premium calculations using the method described below.
This opinion is based exclusively on the facts as presented below that you provided to the
Department and may not apply to different facts in this or other situations.
BACKGROUND
You describe yourself as a firefighter/paramedic employed by a city government in Texas. The
city has a written policy for emergency pay through which—in relevant part—firefighters and
certain other non-exempt employees are paid a premium payment of one half the employee’s
regular hourly rate of pay, which we assume means an employee’s base or usual hourly rate, for
every hour worked during an “emergency period.” The city’s policy defines emergency periods as
periods when, due to a disaster or emergency declaration as defined by the city, only some
“designated emergency employees” must work. You state that although employee job duties
“substantially remain the same” during certain emergency pay periods, “the extreme weather
environment makes those duties more likely to cause physical hardship” for firefighters.
You assert that the emergency pay at issue should be included in the regular rate of pay used to
calculate employee overtime premiums on the basis that it does not fall within any of the statutory
exclusions from the regular rate provided in section 7(e) of the FLSA. See 29 U.S.C. § 207(e).
Additionally, you assert that, as to firefighters specifically, the emergency pay constitutes “hazard
pay,” which, in your understanding, should be included in the regular rate.
GENERAL LEGAL PRINCIPLES
The FLSA requires payment “at a rate not less than one and one-half times the regular rate at which
[the employee] is employed” to all non-exempt employees for all hours worked over 40 hours in
a workweek. 29 U.S.C. § 207(a)(1). The “regular rate” must include “all remuneration for
employment paid to, or on behalf of, the employee,” and must reflect all payments earned during
the workweek, exclusive of overtime payments. Id. at § 207(e); Bay Ridge Operating Co. v. Aaron,
FLSA2025-04

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334 U.S. 446, 461 (1948); see also Madison v. Res. for Human Dev., Inc., 233 F.3d 175, 187 (3d
Cir. 2000) (“[T]here is a statutory presumption . . . that remuneration in any form is included in
the regular rate calculation.”).
The regular rate is subject to eight statutory exclusions provided in section 7(e) of the FLSA. 29
U.S.C. § 207(e). Relevant to this letter, section 7(e)(3) permits an employer to exclude from the
regular rate “sums paid in recognition of services performed during a given period” if “both the
fact that payment is to be made and the amount of the payment are determined at the sole discretion
of the employer at or near the end of the period and not made pursuant to any prior contract,
agreement, or promise causing the employee to expect such payments regularly.” Id. at
§ 207(e)(3); see also 29 CFR 778.211. Such a payment is often termed a “discretionary bonus.”
Additionally, sections 7(e)(5), (6), and (7) of the FLSA provide that certain premium payments
made by employers for work in excess or outside of specified daily or weekly periods or on certain
special days are regarded as overtime premiums which may be excluded from an employee’s
regular rate of pay. See 29 U.S.C. § 207(e)(5)–(7). However, “extra compensation provided by
premium rates other than those described in the statute,” such as “nightshift differentials” and
“premiums paid for hazardous, arduous[,] or dirty work,” “cannot be treated as overtime
premiums.” 29 CFR 778.207. When such premiums are paid, they must be included in a non-
exempt employee’s regular rate of pay. Id.
OPINION
Based on the specific facts described in your letter, the emergency pay at issue does not qualify as
a discretionary bonus that may be excluded from an employee’s regular rate of pay. The emergency
pay also does not fall under any other exclusion from the regular rate of pay under section 7(e) of
the FLSA. Accordingly, under the facts you provided, in workweeks when the city pays emergency
pay, the emergency pay must be included when determining the regular rate of pay used to
calculate employee overtime premiums.
The FLSA requires that three conditions be satisfied for a payment to qualify as an excludable
discretionary bonus: (1) the fact and amount of the payment must be “determined at the sole
discretion of the employer”; (2) the employer’s determination must occur “at or near the end of
the period” when the employee’s work was performed; and (3) the payment must not be made
pursuant to “any prior contract, agreement, or promise” causing employees to expect such
payments regularly. 29 U.S.C. § 207(e)(3). Here, regardless of whether the city’s policy would
constitute a prior contract, agreement, or promise, the first two conditions are not satisfied.
Although the existence and terms of when emergency pay is available may be at the employer’s
discretion, the emergency pay at issue is not “determined at the sole discretion of the employer”
once the employee has performed the work under those terms. Specifically, the policy leaves no
discretion as to whether to provide emergency pay during an emergency period when emergency
work is performed, nor does it leave discretion regarding the amount of the payment as the amount
is set at one half of the employee’s base hourly rate of pay. Moreover, the fact and amount of the
emergency pay are determined well before the emergency work is performed—further evidence
that the payment is non-discretionary in nature. Id. Accordingly, the emergency pay, as described,
does not meet the criteria of a discretionary bonus under section 7(e)(3).

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Similarly, the emergency pay under the specific facts described in your letter also does not qualify
as an excludable overtime premium under sections 7(e)(5), (6), or (7) for the following reasons:
• The emergency pay is not excludable under section 7(e)(5) because it is not contingent
upon the employee working in excess of any particular amount of hours, i.e., working
beyond 8 hours in a day, 40 hours in a workweek, or the employee’s “normal working
hours or regular working hours.” 29 U.S.C. § 207(e)(5).
• The emergency pay is not excludable under section 7(e)(6) because it is not contingent
upon the work being performed “on Saturdays, Sundays, holidays, or regular days of rest,
or on the sixth or seventh day of the workweek.” 29 U.S.C. § 207(e)(6). The emergency
periods described in the city’s policy may or may not fall on such “special days,” and,
importantly, the emergency pay is not limited to or paid because of such days.
• The emergency pay is not excludable under section 7(e)(7) because, regardless of whether
the city’s policy would constitute an employment contract, the pay is not contingent upon
the work being performed outside “the basic, normal, or regular workday ... [or]
workweek” of the employee. 29 U.S.C. § 207(e)(7).
Rather, based upon your representations, we agree with you that the emergency pay does not
qualify as an excludable overtime premium. As such, the emergency pay should be included in the
regular rate of pay used to calculate overtime premiums for any non-exempt city employees who
receive such pay.
To determine the FLSA’s overtime premium pay, the employer first must calculate the employee’s
regular rate. The regular rate is calculated on a workweek-by-workweek basis.
0F
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“The rule for
determining the regular rate of pay is to divide the wages actually paid by the hours actually
worked in any workweek”. Bay Ridge Operating Co., 334 U.S. at 460–61; see also Overnight
Motor Transp. Co. v. Missel, 316 U.S. 572, 580 (1942) (“Wage divided by hours equals regular
rate”).
1F
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First, the employer must total the employee’s “straight-time” earnings (except section 7(e)
statutory exclusions) actually paid for that workweek. Then, the employer must total all the hours
actually worked in that same workweek. Once the straight-time earnings and hours worked are
ascertainable, “the determination of the regular rate becomes a matter of mathematical
computation”. Bay Ridge Operating Co., 334 U.S. at 461 (citations and quotes omitted). To
calculate the regular rate, the employer must divide the total straight-time earnings by the total
hours worked. Finally, to obtain the overtime premium owed for that workweek, the employer

1
Section 7(k) of the FLSA provides a partial overtime exemption for any employee of a public agency engaged in fire
protection activities or any employee engaged in law enforcement activities. See 29 U.S.C. 207(k). Under this
provision, whether overtime pay is owed may be determined based on a “work period” of 7 to 28 consecutive days.
Section 7(k) impacts the determination of whether overtime pay is due and therefore does not impact this opinion
letter—which concerns how to calculate the regular rate when overtime pay is due.
2
You asked whether overtime could be determined in accordance with 29 CFR 778.115. The regular rate computation
as described here, and in the example provided below, are first principles. The provision at 29 CFR 778.115, on the
other hand, is an illustration that would produce the same result.

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must divide the regular rate in half and multiply that amount, per hour, by all overtime hours
worked.
By way of example:
John earns a base hourly rate of $20.00 per hour and works a total of 50 hours in a
workweek, 20 hours of which are during emergency pay hours for which he
receives a premium of one-half his base hourly rate. His total straight-time earnings
would be (50 hours × $20) + (20 hours × $20 × 0.5) = $1,200. His regular rate for
the workweek would therefore be ($1,200 ÷ 50 hours) = $24.00. Thus, he would be
entitled to an additional $12 for each overtime hour worked ($24 × 0.5), for a total
of $120 ($12 × 10 overtime hours), and a grand total of $1,320.
Finally, you asked whether, as to firefighters, the emergency pay would qualify as “hazard pay”
given that firefighters’ work during emergency periods is “more likely to cause physical hardship.”
The Department need not address this question because it is unnecessary to determining whether
the “emergency pay” is included in the regular rate.
We trust that this letter is responsive to your inquiry.
Sincerely,

James R. Macy
Acting Administrator
*Note: The actual name(s) was removed to protect privacy in accordance with 5 U.S.C.
§ 552(b)(6). You represent that you do not seek this opinion for any party that the Wage and Hour
Division (WHD) is currently investigating or for any litigation that commenced prior to your
request. This opinion is based exclusively on the facts and circumstances described in your request
and is given based on your representation, express or implied, that you have provided a full and
fair description of all the facts and circumstances that would be pertinent to our consideration of
the question presented. The existence of any other factual or historical background not contained
in your letter might require a conclusion different from the one expressed herein. This is an official
ruling for purposes of the Portal-to-Portal Act, 29 U.S.C. § 259.