Chapter 7 covered the weighted-average regular rate that ordinarily converts any pay structure into an hourly figure for overtime purposes. Section 7(g) of the Act offers an alternative for three specific situations: an employee paid at piece rates, an employee who performs two or more kinds of work for which different hourly rates have been established, or an employee paid through a combination of hourly and piece rates. In each case, the employer and employee may agree in advance of the work — before it is performed, not after the fact — that overtime hours will be paid at not less than one and one-half times whichever bona fide rate actually applies to the work being done during those overtime hours, rather than at a single blended rate for the whole workweek. A bona fide rate is one actually paid for the work when performed during nonovertime hours, and high enough to yield at least the minimum wage — not a rate set artificially low to evade the overtime requirements.

This alternative is only available if two general requirements are met in every case. First, the employee’s average hourly earnings for the workweek, figured without counting overtime pay or other pay excluded from the regular rate, must still equal at least the applicable minimum wage — a safeguard against an employer setting a low nonovertime rate and offsetting it against overtime pay. Second, any other pay that is required to be included in the regular rate (the exclusions and inclusions Chapter 7 catalogued under section 7(e)), such as certain bonuses, must also receive overtime compensation calculated separately and added to the applicable-rate overtime amounts. Skipping either requirement forfeits the method for that workweek.

The applicable rate method takes a slightly different shape depending on how the employee is paid, but the underlying idea is the same throughout: overtime hours are compensated at one and one-half times whatever bona fide rate governed the work actually performed during those hours, and enough overtime hours must be paid at that premium rate to cover the hours actually worked past the applicable maximum (40 hours in the workweek under section 7(a), as covered in Chapter 7).