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Understanding day rates and overtime pay

Oilfield workers work long, hard hours and sometimes are not properly compensated for such work. Oilfield workers are often cheated out of the rightful amounts due when they are compensated for on a per day-rate calculation. Day-rate oilfield workers are paid a flat amount for each day worked, regardless of the number of hours they put in during each week. Under the federal law governing overtime, the Fair Labor Standards Act (“FLSA”), employers are still required to pay the day-rate workers overtime for all hours worked in excess of 40 per week. It comes as no surprise that failing to pay these workers their rightful amounts due for hours worked over 40 becomes quite lucrative for the employer. The question that often comes up is how does an oilfield worker know that he or she is not being paid properly?

How do you calculate day rate overtime pay?  

If a worker is paid by the day, the question becomes how do you calculate your overtime pay.  In order to answer this question, it becomes important to understand how one’s day-rate is calculated for such oilfield workers: 

  1. First, you multiply the amount the worker is paid for on a given day – this is the day rate plus any additional compensation except for per diem – by the number of days the worker worked in the week. 
  2. Second, you divide the number in step 1 by the total number of hours the worker worked in that week. The result you get is the worker’s regular rate of pay for the week. 
  3. Third, the overtime rate is half the regular rate, which is owed to a worker for each hour worked above 40 in a week.

Using the day-rate method can be lucrative to employers who intend to cheat their workers out of overtime pay. Specifically, an hourly employee’s overtime rate does not change based on the number of overtime hours worked, but a daily-rate employees overtime rate actually decreases the number of hours that employees work increases. Employers often misclassify their employees in order to essentially steal the difference in the overtime pay from their workers. Paying a worker that is not exempt from overtime pay a flat day-rate with no regard for the hours worked is illegal. 

Qualifying as a daily rate employee requires that the oilfield worker actually receive a standard sum for each day worked, whether it be $200 or $600. This rate cannot change based on how many hours the worker actually works in the week. Additionally, in order to qualify, the worker cannot receive any other forms of compensation, such as bonuses or other incentive payments. 

Are you an oilfield worker who has been paid a day-rate but has not been compensated for hours worked over forty? Do you have a question about day rate minimum wage or day rate overtime pay?  If so, consider speaking with an experienced overtime attorney. Josh Borsellino is an experienced overtime attorney who handles unpaid overtime cases and has handled overtime pay claims for hundreds of oilfield workers. He offers free consultations and there is no upfront cost – and only gets paid if you get paid! Call him today at 817.908.9861 or 432.242.7118.