Opinion of the Court. 325 U.S. At the same time, however, the validity of the new wage agreements was also at stake. These agreements on their face contemplated future hourly payments at regular and overtime rates as well as additional piece rate payments. Since the Administrator's complaint alleged generally that the respondent was violating §§ 7 and 15 (a) (2) by employing its stackers on a piece work basis for more than 40 hours a week without compensating them for overtime at one and one-half times the regular rate, the question as to whether the new contracts satisfied § 7 (a) was properly in issue. Upon proof that these new provisions did not comply with § 7 (a) the Administrator was therefore entitled to an injunction absent any recognized mitigating factor. Evidence on this matter was introduced at the trial and the two courts below considered the contracts thoroughly, predicating their judgments in part upon the belief that the agreements did comply with § 7 (a). We accordingly turn to a consideration of that question. Second. For approximately six months immediately preceding the trial the stackers were paid piece rates of 60 cents per thousand board feet ricked and 70 cents per thousand board feet stacked. During this period they earned at these rates an average of 51 cents an hour. Under the new contracts made on the day before the trial, however, they were compensated according to the following provisions: "The basic or regular rate of pay is 35 cents per hour for the first forty hours each week and for time over forty hours each week the pay shall not be less than one and one-half times such basic or regular rate above mentioned with a guaranty that the employee shall receive weekly for regular time and for such overtime as the employee may work a sum arrived at as follows: "The amount of stacking done by said employee shall be figured on the basis of 80 cents per thousand board 419 Opinion of the Court. feet of lumber for flat stacking and 70 cents per thousand board feet of lumber ricked." Using by way of illustration the labor performed and the hours worked during the six-month period preceding the trial, the Administrator points out that under the new guaranteed piece rates of 70 and 80 cents per thousand the stackers would earn an average of about 59 cents an hour for all hours actually worked, including those in excess of the statutory maximum. On the basis of the contract "regular rate" of 35 cents an hour, on the other hand, the excess hours would yield the stackers only 522 cents hourly. It is thus apparent that the guaranteed piece rates would yield greater returns on an hourly basis for both regular and overtime work and that they would actually be the rates paid. The respondent argues that these contract provisions satisfy § 7 (a) since they provide for a "regular rate" of 35 cents an hour and for payment of one and one-half times that rate, or 5212 cents, for all overtime hours. Inasmuch as the Act does not forbid incentive pay or compensation above and beyond the statutory requirements it is urged that the additional payments resulting from the operation of the guaranteed piece rates are unaffected in any way by § 7 (a). We cannot agree, however, that this scheme of compensation is obedient to this statutory mandate. Under § 7 (a) an employer is required to compensate his employees for all hours in excess of 40 at not less than one and one-half times the regular rate at which they are employed. Thus by increasing the employer's labor costs by 50% at the end of the 40-hour week and by giving the employees a 50% premium for all excess hours, § 7 (a) achieves its dual purpose of inducing the employer At the time these contracts were made the minimum wage for the timber products industry had been fixed at 35 cents an hour in an order issued by the Administrator. 664818-4631 Opinion of the to reduce the hours of work and of compensating the employees workweek. Overnight Motor 572, 577-578; Walling v. Helm Jewell Ridge Coal Corp. v. pp. 161, 167. 4 The keystone of § 7 (a) is t sation. On that depends the ments which are necessary purposes. The proper dete therefore of prime importance As we have previously not the hourly rate actually paid non-overtime workweek for ling v. Helmerich & Payne, Rosenwasser, 323 U. S. 360, £ wages, this regular rate co actually received for all h ticular workweek, such ra amount received during the of hours worked. See O2 supra, 580. As long as the lished by § 6 are respecte are free to establish this re any manner they see fit. pensation according to an they desire. United State this freedom of contract compute the regular rate ficial manner so as to n Walling v. Helmerich & rate by its very nature 1 the parties have agreed s the workweek, exclusive an arbitrary label chose fact. Once the parties h ent of the Case. TRATOR OF THE WAGE AND CUIT COURT OF APPEALS FOR THE ay 1, 1945. Decided June 4, 1945. I at by collective bargaining, provided for ied base rate or "regular rate." On "time bonuses" or "piecework earnings" normally ceiving compensation, exclusive of overtime gher than the base rate. The hourly rate jobs not "time studied" was at least 20% Ield: who received hourly rates higher than the ition of overtime on the basis of such rate te actually received violated §7 (a) of the Act. P. 430. who received incentive bonuses, such paythe computation of the statutory regular rate ertime provisions of § 7 (a), regardless of any the contrary. P. 431. the facts do not permit it, the Court cannot ises or piece-work wages into regular and overby creating artificial compliance with § 7 (a). ient that the employer pays for overtime a es the overtime rate somewhat higher than the per hour; section 7 (a) requires that that s than 50% of the actual hourly rate received rces. P. 432. rrect overtime compensation cannot be detere regular payday, §7 (a) requires only that the ich compensation as soon as convenient or pracircumstances. P. 432. ed. 1 U. S. 837, to review the reversal of an trict Court, 54 F. Supp. 326, enjoining Fair Labor Standards Act. to reduce the hours of work and to employ more men and of compensating the employees for the burden of a long workweek. Overnight Motor Co. v. Missel, 316 U. S. 572, 577-578; Walling v. Helmerich & Payne, supra, 40; Jewell Ridge Coal Corp. v. Local No. 6167, ante, pp. 161, 167. The keystone of § 7 (a) is the regular rate of compensation. On that depends the amount of overtime payments which are necessary to effectuate the statutory purposes. The proper determination of that rate is therefore of prime importance. As we have previously noted, the regular rate refers to the hourly rate actually paid the employee for the normal, non-overtime workweek for which he is employed. Walling v. Helmerich & Payne, supra, 40; United States v. Rosenwasser, 323 U. S. 360, 363. In the case of piece work wages, this regular rate coincides with the hourly rate actually received for all hours worked during the particular workweek, such rate being the quotient of the amount received during the week divided by the number of hours worked. See Overnight Motor Co. v. Missel, supra, 580. As long as the minimum hourly rates established by 6 are respected, the employer and employee are free to establish this regular rate at any point and in any manner they see fit. They may agree to pay compensation according to any time or work measurement they desire. United States v. Rosenwasser, supra. "But this freedom of contract does not include the right to compute the regular rate in a wholly unrealistic and artificial manner so as to negate the statutory purposes." Walling v. Helmerich & Payne, supra, 42. The regular rate by its very nature must reflect all payments which the parties have agreed shall be received regularly during the workweek, exclusive of overtime payments. It is not an arbitrary label chosen by the parties; it is an actual fact. Once the parties have decided upon the amount of |