Flag rate pay
Flag rate pay, also called flat rate pay, pays a technician for the hours a labor guide assigns to a repair, not the hours spent.
A job flagged at two hours pays two hours whether the work took ninety minutes or three. Earnings equal flagged hours times the technician’s flag rate, so beating the guide earns more and falling behind earns less. Flagged hours come from a labor guide or manufacturer warranty schedule; clock hours are the hours actually at work. Warranty work commonly flags fewer hours than the same operation billed to a customer. You still record clock hours, because attendance drives the minimum-wage and overtime math.
Do minimum wage and overtime still apply?
Flag rate earnings do not remove wage-and-hour obligations. A slow week can require a true-up even where the flag rate looks generous. A narrow Fair Labor Standards ActFLSA. The Fair Labor Standards Act (FLSA) is the federal law setting minimum-wage, overtime, recordkeeping, and youth employment standards for covered employment.Click to open the term exemption, section 13(b)(10)(A), removes overtime but not minimum wageMinimum wage. Minimum wage is the lowest hourly rate you may legally pay a covered employee, set by federal, state, and sometimes local law.Click to open the term for certain dealership employees. It covers salesmen, partsmen, and mechanics primarily engaged in selling or servicing automobiles at a dealership selling to ultimate purchasers. Its availability turns on the specific facts. State law can be stricter, so confirm the treatment with the Department of Labor and the applicable state agency.
| FIGURE | WHAT DRIVES IT |
|---|---|
| Earnings | Flagged hours × the flag rate |
| Minimum-wage test | Total workweek pay ÷ hours actually worked must reach the applicable minimum wage |
| Overtime | The regular rate, from the week’s total earnings and hours worked, not flagged hours alone |
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.