Overtime Compensation for Employees Being Trained

The FAR cost principles contain a very brief and straight-forward statement concerning the payment of overtime to training and education. FAR 31.205-44 states that the cost of training and education that are related to the field in which the employee is working or may reasonable be expected to work are allowable except that overtime compensation for training and education is unallowable. There are also a few other exceptions that fall outside of this discussion.

The Government has been very inconsistent in applying this prohibition against paying overtime compensation however. In some cases, contracting officers have maintained that the training contemplated by this cost principle applies to discretionary training and not to training required by the terms of the contract (e.g. ethics, standards of conduct, safety, etc). Other contracting officers have asked contractors to demonstrate that overtime compensation for training is the most cost-effective way to achieve its training goals. For example, if you have to pay someone else overtime so that a person can leave his/her position for training on regular time, there is no cost impact to the contract. The Department of Energy has taken the extreme position that overtime payments for training purposes - any kind of training - are never allowable under any circumstances regardless of whether the outcome costs the Government more money.

Recently, someone posed a question to the Department of Defense's "Ask a Professor" website noting the general FAR prohibition against overtime for training stating that a contractor provided convincing evidence that paying overtime for training would ultimately save the Government significant costs.

Here's DoD's answer:

Many of the cost principles that relate to allowability of personnel costs mirror treatment of similar costs for Federal employees. In this case Title 5 CFR 410.402(a) states for Federal employees "Prohibitions. Except as provided by paragraph (b) of this section, an agency may not use its funds, appropriated or otherwise available, to pay premium pay to an employee engaged in training by, in, or through Government or non-government facilities." Section (b) that follows provides a list of exceptions that may be useful in requesting a waiver to FAR 31.205-44.

What are those exceptions referenced?

1. Continuation of premium pay. An employee given training during a period of duty for which he or she is already receiving premium pay for overtime, night, holiday, or Sunday work shall continue to receive that premium pay.
2. Training at night. An employee given training at night because situations that he or she must learn to handle occur only at night shall be paid by the applicable premium pay.
3. Cost savings. An employee given training on overtime, on a holiday, or on a Sunday because the costs of the training, premium pay include, are less than the costs of the same training confined to regular work hours shall be paid the applicable premium pay.

There are eight exceptions in total but these three are the ones most likely to apply to Government contractors.

So, according to DoD, there is a little wiggle-room in the prohibition against overtime for training purposes. That's good to know. Contractors just need to build a business case to show the efficacy of their decisions.