Donald McQuigg and several others (collectively, “McQuigg”) sued their employer, the United States Postal Service (the “Postal Service”) for failure to pay adequate overtime wages. McQuigg claimed the Postal Service’s formula for computing overtime pay violated the Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (1988).

The district court granted partial summary judgment for McQuigg, concluding: (1) the Postal Service’s formula for computing overtime pay violated the Act; and (2) the Postal Service could not avail itself of a statutory good-faith defense to liability. We have jurisdiction under 28 U.S.C. § 1292 (b) (1988), and we affirm in part and reverse in part. This case involves several technical terms; accordingly, we include a glossary as Appendix 1.

STATUTORY & REGULATORY FRAMEWORK

A

The Fair Labor Standards Act (the “Act”) requires the Postal Service to pay its employees a premium for overtime work. See 29 U.S.C. § 203 (e)(2)(B) (1988); 29 U.S.C. § 207 (a)(1) (1988). The Postal Service must pay its employees “at a rate not less than one and one-half times the regular rate” for all hours over 40 hours per week. 29 U.S.C. § 207 (a)(1); see 29 C.F.R. § 778.107 (1990). An employee’s “regular rate” under the Act is always an hourly rate. 29 C.F.R. § 778.109 (1990). The “regular ... rate ... is determined by dividing [an employee’s] total remuneration ... [before he receives the overtime premium] in any workweek by the total number of hours actually worked by him in that workweek....” Id.; but cf. Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424 , 65 S.Ct. 1242, 1245 , 89 *592 L.Ed. 1705 (1945) (“the regular rate refers to the hourly rate actually paid the employee for the normal, non-overtime workweek for which he is employed” (emphasis added)). Thus, if an employee receives $600 (before any overtime premium) for a 50-hour week (whether in hourly wages, a lump sum, or both), his “regular rate” under the Act is $12/hour. The employee would be paid for his 10 overtime hours at a rate of (U/2 x $12/hour) = $18/hour. See 29 U.S.C. § 207 (a)(1).

Postal Service employees working in Alaska receive a Territorial Cost of Living Adjustment (“TCOLA”) in addition to their basic pay. 1 See 5 U.S.C. § 5941 (1988); 39 U.S.C. § 1005 (b) (1988). The TCOLA is “calculated and paid as a percentage of an employee’s hourly rate of basic pay [i.e., the base rate] for those hours for which the employee receives basic pay_” 5 C.F.R. § 591.210 (b)(1) (1991). By statute, Postal Service employees receive basic pay for a 40-hour workweek. 5 U.S.C. § 6101 (a)(2)(A) (1988).

The parties agree on how to calculate TCOLA payments. For example, consider an employee who works 50 hours/week at a base rate of $10/hour, and receives a TCOLA of 25%. Under the applicable regulations, the TCOLA is paid only during the basic, 40-hour week, even though the employee actually works 50 hours. See 5 C.F.R. § 591.210 (a) (1991). Accordingly, the employee’s TCOLA is 25% of $10/hour = $2.50/hour. , The TCOLA is paid for 40 hours, and yields a TCOLA payment of (40 hours X $2.50/hour) = $100. 2

The parties also agree the TCOLA contributes to the hourly “regular rate” under the Act. See generally 5 C.F.R. § 591 .-210(e)(2) (1991). The regular rate is calculated by dividing the employee’s total remuneration (exclusive of any overtime premium, but including the TCOLA) by his total number of hours worked (including overtime hours). See id.; 29 C.F.R. § 778 .-109. In the example above, the employee’s “regular rate” is his total remuneration, [ (50 hours X $10/hour) + (TCOLA payments of: 40 hours X $10/hour X 25%) ] = [ ($500) + ($100) ] = $600, divided by the total number of hours worked, 50, = ($600/50 hours) = $12/hour. See 29 U.S.C. § 207 (a)(1); 29 C.F.R. § 778.109 .

These equations also demonstrate that the regular rate is always greater than the base rate. The regular rate is greater than the base rate because the regular rate includes the TCOLA, while the base rate does not. In the example above, the regular rate is $12/hour, while the base rate is only $10/hour, because the regular rate includes the $100 in TCOLA payments spread over a 50-hour week. The TCOLA payments add $2/hour to the regular rate. [ (40 hours X $10/hour X 25%)/(50 hours) ] = [ ($100)/(50 hours) ] = $2/hour.

Finally, in an overtime week, the hourly regular rate is always less than the sum of the base rate plus the TCOLA. This is so because the TCOLA is paid only for the basic workweek, 40 hours, while the regular rate is computed using the total workweek, including overtime hours. In any overtime week, the TCOLA payments are a constant, and insofar as they contribute to the regular rate, are spread more and more thinly as the employee works more and more overtime hours. Modifying the example above, if the employee works 40 hours, *593 the TCOLA payments would contribute ($100/40 hours) = $2.50/hour to the regular rate. 3 If the employee works 60 hours, the TCOLA payments would contribute only ($100/60 hours) = $1.67/hour to the regular rate. As soon as the employee exceeds 40 hours, the TCOLA stops being paid, and therefore makes a smaller contribution to the regular rate.

B

This case arises at the intersection of the Act and the TCOLA. It centers on the proper method for calculating the pay of Postal Service employees who receive a TCOLA and work overtime. As noted above, the parties agree the TCOLA is part of an employee’s “regular rate” under the Act. See generally 5 C.F.R. § 591 .-210(e)(2). Indeed, there is no dispute over how to calculate either the regular rate or the TCOLA. The district court noted: “[o]ne might think that if, as is the case here, the parties agree on the computation of ‘regular rate of pay’ then there could be no disagreement about the product of one and one-half times the regular rate of pay.” The Postal Service states in its brief: “this appeal involves neither a factual nor a purely legal dispute, but largely an arithmetic one.” Although the case does involve some difficult mathematical issues, it actually turns on Congress' intent in enacting the TCOLA statute.

FACTS AND PROCEEDINGS BELOW

Prior to this case, the interplay between the Act and the TCOLA had generated a substantial amount of litigation. In 1977, shortly after the Act became applicable to the Postal Service, the District Court for the District of Columbia ruled the Postal Service had wrongfully excluded the TCO-LA from its employees’ regular rate in calculating overtime pay under the Act. Kaplan v. United States Postal Service, No. 75-1505, memorandum at TT 5 (D.D.C. Oct. 4, 1977); see Donovan v. United States Postal Service, 530 F.Supp. 872, 877-78 (D.D.C.1981). In 1978, the court ordered the Postal Service to pay liquidated damages for the violations. Kaplan v. United States Postal Service, No. 75-1505, memorandum at lili 5-8 (D.D.C. Jan. 13, 1978); see Donovan, 530 F.Supp. at 877-78 .

Later in 1978, the Department of Labor (the “DOL”) sued the Postal Service for further violations of the Act. 4 See Donovan, 530 F.Supp. at 872 ; Donovan v. United States Postal Service, 530 F.Supp. 894 (D.D.C.1981). In 1982, the Donovan case was settled with a judicially-approved agreement prohibiting all private lawsuits against the Postal Service under the Act. See 29 U.S.C.A. § 216 (b)-(c) (West Supp. 1991) (authorizing such a settlement agreement). On June 15, 1983, the Donovan case was dismissed, opening the door to new private lawsuits against the Postal Service.

On February 14, 1983, four months before the dismissal of Donovan, McQuigg filed this lawsuit under 29 U.S.C.A. § 216 (b) against the Postal Service in Alaska federal district court. McQuigg claimed the Postal Service was undercompensating him for overtime work. On August 4, 1986, the court dismissed the part of McQuigg’s complaint relating to activity before June 15, 1983, based on the settlement in Donovan, 5 and sustained the rest of the complaint.

On January 8, 1982, counsel for the National Association of Letter Carriers (“NALC”) wrote to the DOL’s Wage and Hour Administrator (“Administrator”). NALC’s counsel requested “an opinion under the [Act] ... regarding the method used by the United States Postal Service ... to calculate overtime payments where a *594 ... TCOLA ... is involved.” (Opinion Letter of May 13, 1983). The DOL’s Opinion Letter unequivocally approved the Postal Service’s methodology. On August 8, 1983, in response to a letter from McQuigg’s counsel, the Administrator reaffirmed the Opinion Letter’s conclusions.

Despite the Opinion Letter, on April 30, 1987, the district court ordered partial summary judgment for McQuigg on the issue of the Postal Service’s liability under the Act. The court held the methodology in the Administrator’s Opinion Letter “directly contravenes the requirements of section 207(a)(1) of [the Act].”

Subsequently, the Postal Service claimed a defense to liability under the Act based on its asserted good-faith reliance on the DOL’s administrative regulations in calculating overtime pay. See 29 U.S.C. § 259 (1988). However, the district court disagreed, and on December 7, 1988, it ordered summary judgment for McQuigg on the Postal Service’s good-faith defense.

On November 2, 1989, the district court certified both of its orders for interlocutory appeal. On January 30, 1990, this court granted the Postal Service’s petition to appeal. We have jurisdiction to review the interlocutory orders under 28 U.S.C. § 1292 (b). “We review de novo a summary judgment. Where the facts are not disputed, the question is whether the district court correctly interpreted and applied the law.” Swamer v. United States, 937 F.2d 1478 , 1481 (9th Cir.1991) (citation omitted).

OVERTIME PAY

The Postal Service uses the following mathematical formula to calculate an employee’s weekly pay.

On its face, this formula may appear invalid because [C] contains only ,ak X regular rate,” rather than “IV2 x regular rate,” as the Act requires. See 29 U.S.C. § 207 (a)(1). In its Opinion Letter, the DOL defends the formula as follows: “[s]ince in the calculation of the regular rate [base] pay is computed for all hours worked in the workweek, only additional half-time is required for the hours over 40.” The DOL appears to argue that because [A] pays the base rate for total hours, rather than for 1¡.0 hours, [C] pays the correct additional amount for overtime.

McQuigg claims the Postal Service’s formula violates the Act. Following the apparent reasoning of the DOL’s letter, McQuigg divides “total hours” from [A] into “40 hours” plus “overtime hours.” McQuigg thus divides [A] into [Al], the 40-hour component, and [A2], the overtime component. [Al] = (base rate X 40 hours). [A2] = (base rate X overtime hours). Adding [A2] to [C], McQuigg complains the Postal Service pays overtime at [(base rate) + (V2 X regular rate) ] rather than at (IV2 x regular rate), as the Act mandates. See 29 U.S.C. § 207 (a)(1). When an employee receives a TCOLA and works overtime, his regular rate exceeds his base rate. See supra at 592. Therefore, McQuigg asserts, he receives less than his due for overtime.

McQuigg argues the Act requires payment according to the following formula.

McQuigg’s formula pays more than the Postal Service’s formula. For example, consider again the employee who works 50 hours per week, earns a base rate of $10/ hour, and receives a TCOLA of 25%. There is no dispute that this employee’s regular rate is $12/hour. According to the Postal Service’s formula, the employee receives:

According to McQuigg’s formula, the employee receives:

Prima facie, McQuigg makes a persuasive case for his formula, and against the Postal Service’s formula. In a non-overtime week, an employee receives [ (base rate X 40) + (TCOLA payments) ], which corresponds to [A] + [B] in *595 McQuigg’s formula. In an overtime week, the Act appears to mandate an additional payment of (1% X regular rate) for each overtime hour, which corresponds to [C] in MeQuigg’s formula. According to McQuigg’s analysis, the Postal Service’s formula pays [Al] + [B] for the nonover-time portion of the week, and pays [A2] + [C] for the overtime portion of the week. Adding [A2] and [C] yields [ (base rate) + (V2 X regular rate) ], a sum which is less than the (IV2 X regular rate) required by the Act. See 29 U.S.C. § 207 (a)(1).

However, as one court has noted, the Postal Service’s formula “is a statement of the arithmetic processes to go through to ensure that an employee is paid the one and one-half times the regular rate for overtime that the worker is entitled to_” Brooks v. Weinberger, 730 F.Supp. 1132, 1138 (D.D.C.1989). That is, the formula is but a means to an end, and we must give it its best defense. Indeed, in this case, the DOL specifically has endorsed the Postal Service’s formula in an Opinion Letter. Accordingly, we must follow the commands of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 , 104 S.Ct. 2778 , 81 L.Ed.2d 694 (1984). See Transpacific Westbound Rate Agreement v. Fed. Maritime Comm’n, 938 F.2d 1025, 1028 (9th Cir.1991); Washington State Health Facilities Assoc. v. Dep’t of Social and Health Servs., 879 F.2d 677, 681 (9th Cir.1989) (“An agency’s interpretation of its own regulations is entitled to a high degree of deference and will be upheld as long as it is not plainly erroneous or inconsistent with the regulation”).

“First, we must determine whether the language of the statute is clear. ‘If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.’ ” Transpacific, 938 F.2d at 1028 (quoting Chevron, 467 U.S. at 842-43 , 104 S.Ct. at 2781-82 ). As Chevron itself states, “[i]f a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.” Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. at 2781 n. 9.

“However, ‘if the statute is silent or ambiguous with respect to the specific issue,’ ‘the court does not simply impose its own construction on the statute.... Rather, ... the question for the court is whether the agency’s answer is based on a permissible construction of the statute.’ ” Transpacific, 938 F.2d at 1028 (quoting Chevron, 467 U.S. at 843 , 104 S.Ct. at 2782 ; omissions in Transpacific).

There is no question the Act requires IV2 X regular rate for all overtime hours. See 29 U.S.C. § 207 (a)(1). The Postal Service does not dispute this. However, it correctly asserts its formula is mathematically equivalent to the following formula.

40 hours X regular rate

+ Overtime hours X IV2 X regular rate

This second formula pays the correct overtime, but pays for the basic workweek (40 x regular rate) instead of [ (40 x base rate) + (TCOLA payments) ], or the equivalent, 6 [ (40) X (base rate + TCOLA) ]. In an overtime week, the regular rate is always less than the base rate plus the TCO-LA. See supra at 592-93. Accordingly, although the Postal Service pays the correct overtime, it pays less for the first 40 hours of an overtime week than it does for the same hours in a nonovertime week.

To illustrate this point, consider two postal employees, A and B. Both A and B earn a base rate of $10/hour, and receive a TCOLA of 25%. In a given week, A works 40 hours and B works 50 hours. According to the Postal Service, A receives $500 for 40 hours. [ (40 hours X $10/hour) + (40 hours X $10/hour X 25%) ] = [ ($400) + ($100) ] = $500. B receives only $480 for the same 40 hours. [ (50 hours x $10/ hour) + (40 hours X $10/hour X 25%) ] = [ ($500) + ($100) ] = $600 total remuneration; [ ($600)/(50 hours) ] = $12/hour regular rate; ($12/hour X 40 hours) = $480.

Under the Postal Service’s second formula, an overtime employee receives less than a nonovertime employee for the same 40 *596 hours of work. The second formula reduces 40-hour earnings in order to pay overtime earnings. Were there no justification for this approach, we would strike it down as an attempted end-run around the Act. Neither the Postal Service nor the DOL may arbitrarily mandate lower basic wages in order to pay statutorily required overtime wages. See Chevron, 467 U.S. at 844 , 104 S.Ct. at 2782 (“regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute”); see also 29 C.F.R. subpart F, §§ 778.500-03 (1990) (“Devices to Evade the Overtime Requirements” of the Act).

At various points in its opening brief, the Postal Service offers a defense of its practice. It argues the TCOLA is to be prorated over the entire workweek: it is to be “treated ... as if it was earned equally in each hour of the workweek, notwithstanding that the TCOLA is actually paid for just 40 hours.” 7 For example, if the base rate is $10/hour, the TCOLA is 25%, and the workweek is 50 hours, the Postal Service treats the TCOLA as a $2/hour additional wage earned over 50 hours, rather than as a $2.50/hour wage earned over 40 hours. 8

If the TCOLA may be prorated over the entire workweek, the Postal Service’s formula is justified. Prorating the TCOLA, the Postal Service pays for the basic workweek: [ (40 hours) x (base rate + prorated TCOLA)]. It pays for overtime: [[(overtime hours) X (base rate + prorated TCO-LA) ] + (overtime hours X lh X regular rate)]. The base rate plus the prorated TCOLA add up to the regular rate. See supra at 592-93 & note 3. Thus the formula pays the correct overtime of [(overtime hours) X [ (1 X regular rate) + {lk X regular rate) ]] = [ (overtime hours) X (IV2 X regular rate) ]. The formula’s lower payment for the 40-hour portion of the workweek comes from prorating the TCO-LA over the entire workweek, and including only a portion of the TCOLA payments in 40-hour earnings. The legality of the lower payment for the 40-hour week depends on the validity of proration.

This case therefore hinges on whether the TCOLA may be prorated, which in turn depends on congressional intent in enacting the TCOLA statute. If Congress intended the TCOLA as an adjustment to basic pay, the TCOLA should be paid in full during the basic, 40-hour workweek, and may not be prorated. If the TCOLA may not be prorated, the Postal Service’s formula fails. However, if Congress intended the TCOLA as an adjustment to total pay, including overtime, the TCOLA may be prorated, and the Postal Service’s formula passes muster.

After “employing the traditional tools of statutory construction,” Chevron 467 U.S. at 843 n. 9, 104 S.Ct. at 2781 n. 9, we are convinced that Congress intended the TCO-LA as an adjustment to basic pay. Accordingly, the TCOLA may not be prorated, and the Postal Service’s formulae fail, despite the fact that the DOL specifically has endorsed them.

The TCOLA statute makes the TCOLA available for employees “whose rates of basic pay are fixed by statute.” 5 U.S.C. § 5941 (a). It also states that the TCOLA “may not exceed 25 percent of the rate of basic pay.” Id. The implementing regulations follow this statutory command by computing the TCOLA as a percentage of basic pay. See 5 C.F.R. § 591.210 (b)(1); see also Kester v. Campbell, 652 F.2d 13, 14 (9th Cir.1981) (“employees of the federal government who are located outside the continental United States ... are entitled to a cost-of-living allowance, in addition to their base pay”) (Farris, J.), cert. denied sub nom. Kester v. Devine, 454 U.S. 1146 , 102 S.Ct. 1008 , 71 L.Ed.2d 298 (1982).

The first TCOLA statute was passed in 1948 as authorization for Executive Order *597 No. 10,000, signed by President Truman. See Curlott v. Campbell, 598 F.2d 1175, 1177 (9th Cir.1979); Kester v. Horner, 778 F.2d 1565, 1567 (Fed.Cir.1985), cert. denied, 479 U.S. 854 , 107 S.Ct. 190 , 93 L.Ed.2d 123 (1986). The statute was reco-dified in 1966. See Pub.L. 89-554, 80 Stat. 512 (1966). Executive Order No. 10,000 contained the following provision.

Exec. Order No. 10,000, 13 Fed.Reg. 5453 (1948), reprinted as amended in 5 U.S.C.A. § 5941 (1980) (emphasis added).

Executive Order No. 10,000 allows pro-ration, but only within the basic-pay period. It does not authorize proration of the TCOLA into overtime. The current regulations implementing the TCOLA echo this approach: the TCOLA “is calculated and paid as a percentage of the employee’s hourly rate of basic pay for those hours for which the employee receives basic pay_” 5 C.F.R. § 591.210 (b)(1) (emphasis added).

There is a sensible reason for not prorating the TCOLA. Including the entire TCO-LA in basic pay ensures that employees who work overtime receive the same pay for 40 hours as employees who do not work overtime. It eliminates the anomaly which proration was designed to justify. Indeed,

5 U.S.C.A. § 5301 (West Supp.1991) (emphasis added). Prorating the TCOLA, and thereby paying overtime employees less than nonovertime employees for the same 40 hours of work, does not yield “equal pay for equal work.”

The TCOLA statute delegates fairly broad power to the Executive branch. “Except as otherwise specifically authorized by statute, the [TCOLA] is paid only in accordance with regulations prescribed by the President establishing the rates and defining the area, groups of positions, and classes of employees to which each rate applies.” 5 U.S.C. § 5941 (a). But the power delegated is the power to set the amount of the TCOLA, so long as it does not “exceed 25 percent of the rate of basic pay.” Id. There is no express delegation of authority to determine whether the TCOLA is to be included in base or overtime pay; and as discussed above, Congress appears to have intended the TCOLA as an addition to base pay.

Chevron does not allow an agency’s interpretation of a statute to override congressional intent. Here, “employing traditional tools of statutory construction, ... [it appears] that Congress had an intention on the precise question at issue,” Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. at 2781 n. 9, and that the intention was to make the TCOLA an addition to basic pay. Accordingly, despite the deference which we owe to the DOL, we affirm the district court on the Postal Service’s liability under the Act. The Postal Service’s formula for calculating overtime pay when employees receive a TCOLA does not comport with the Act or the TCOLA statute. 9

*598 GOOD-FAITH DEFENSE

29 U.S.C. § 259 , part of the Portal-to-Portal Act, establishes the following defense to liability under the Act.

29 U.S.C. § 259 (a).

This statute insulates the Postal Service from liability if it can show it acted in (1) good faith, (2) conformity with, and (3) reliance on the DOL’s regulations or the Administrator’s Opinion Letter. All parties agree the Postal Service has calculated overtime pay in “conformity with” the Department of Labor’s Opinion Letter.

The district court also correctly concluded: “there is no genuine fact dispute but that [the Postal Service] computed wages at all times relevant to this case in reliance upon” the DOL’s Opinion Letter. McQuigg disputes this point in his brief, but offers no persuasive rationale for his position. Under the terms of the Donovan agreement, the Postal Service is not liable to McQuigg for violations of the Act occurring before June 15, 1983. 10 The Administrator wrote his Opinion Letter on May 13, 1983, two months before that date.

The key question is whether or not the Postal Service acted in “good faith” when it relied on the DOL’s Opinion Letter. The DOL’s regulations implementing 29 U.S.C. § 259 (a) define and explain “good faith."

29 C.F.R. § 790.15 (a) (1990) (footnotes omitted); see Kam Koon Wan v. E.R. Black, Ltd., 188 F.2d 558, 562 (9th Cir.1951), cert. denied, 342 U.S. 826 , 72 S.Ct. 49 , 96 L.Ed. 625 (1951).

The district court concluded the Postal Service had not acted in good faith because McQuigg’s complaint “put [it] upon inquiry” that its overtime pay methodology was challenged. McQuigg posits a stronger version of this view, claiming that a union grievance which he filed on October 1, 1981, put the Postal Service on notice.

The DOL’s regulations do not support either the district court’s or McQuigg’s view. The Portal Act and its regulations strongly imply that an employer who relies on and conforms to an Opinion Letter which specifically addresses him and his circumstances is acting in good *599 faith. See 29 C.F.R. § 790.15 (b) (1990). The regulations and relevant precedent also indicate that any duty of inquiry owed by the employer is satisfied by an inquiry to the Administrator. See id; Olson v. Superior Pontiac-GMC, Inc., 765 F.2d 1570, 1580 (11th Cir.1985) (in a case where “the president of a company and one of its top administrators had differing interpretations of a provision.... a prudent person would have sought professional advice”), modified on different grounds, 776 F.2d 265 (11th Cir.1985); Beebe v. United States, 226 Ct.Cl. 308 , 640 F.2d 1283, 1293-94 (1981).

We detect no manifestly contrary congressional intent, and accordingly we defer to the regulations. See Transpacific, 938 F.2d at 1028 . Thus, even if (as the district court concluded) McQuigg’s complaint created a duty of inquiry on the part of the Postal Service, that duty was fulfilled when the Postal Service received the Administrator’s Opinion Letter specifically endorsing its overtime pay practice. The fact that the Postal Service did not itself request the Opinion Letter is irrelevant.

Accordingly, we reverse the district court on the issue of the Postal Service’s good-faith defense under 29 U.S.C. § 259 . The Postal Service is protected from any back-pay liability to April 30,1987, the time of the district court’s order invalidating the Opinion Letter and finding liability under the Act. See 29 U.S.C. § 259 (a).

CONCLUSION

We affirm the district court on the issue of the Postal Service’s liability under the Act. Although the DOL has endorsed the Postal Service’s approach, Congress specifically has not endorsed it. Congress’ intent “is the law and must be given effect.” Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. at 2781 n. 9.

We reverse the district court on the issue of the Postal Service’s good-faith defense to liability under the Act because the Postal Service relied on and conformed to the Administrator’s Opinion Letter which specifically endorsed its overtime pay methodology.

Each party shall bear its own costs.

AFFIRMED IN PART AND REVERSED IN PART AND REMANDED.

APPENDIX 1: GLOSSARY

Regular Rate. Defined by the regulations as “total remuneration,” (excluding the overtime premium but including the TCO-LA payment), divided by “total number of hours actually worked.” 29 C.F.R. § 778 .-109. It is always an hourly rate. Id. The regular rate is used to calculate overtime pay under the Act. The Act requires wages of (IV2 x regular rate) for each overtime hour worked. 29 U.S.C. § 207 (a)(1).

Base Rate. The employee’s normal, hourly wage, not including the TCOLA or other special bonuses.

Basic Workweek. For postal workers, the basic workweek is 40 hours. 5 U.S.C. § 6101 (a)(2)(A).

Basic Pay. The base rate paid for the basic workweek. For example, if a postal worker has a base rate of $10/hour, his basic pay is [ ($10/hour) x (40 hours) ] = $400.

TCOLA. The Territorial Cost of Living Adjustment, paid to postal employees in Alaska. 5 U.S.C. § 5941 ; 39 U.S.C. § 1005 (b). The TCOLA is calculated as a percentage of the employee’s base rate, and paid for the basic workweek. For example, if the base rate is $10/hour, and the TCOLA is 25%, the postal employee (who has a basic workweek of 40 hours) has a TCOLA of $2.50/hour, paid for 40 hours, for a total TCOLA payment of $100. In this opinion, we use “TCOLA” to refer either to the percentage (25%) or dollars/hour ($2.50/hour) amount; we use “TCOLA payment” to refer to the dollar amount received by the postal worker ($100) due to the operation of the TCOLA. The TCOLA payment remains constant in any overtime week because it is generated using the basic week, which is 40 hours, no matter how many hours the employee actually works.

*600 TCOLA Payment. The TCOLA paid over the basic workweek. We use “TCOLA payment” to refer to the dollar amount received by the postal worker due to the operation of the TCOLA. We use “TCO-LA” to refer to a percentage or dollar/hour amount.

Prorated TCOLA. We use “prorated TCO-LA” to refer to a dollar/hour amount produced by dividing the TCOLA payment by the total number of hours in the workweek. For example, if a postal employee earns a base rate of $10/hour and a TCOLA of 25% (or $2.50/hour), he receives a TCOLA payment of $100. If he works 50 hours, his prorated TCOLA is ($100/50 hours) = $2/ hour. As he works more overtime hours, his prorated TCOLA shrinks because the TCOLA payment (which remains constant in any overtime week) is divided by an increasingly large number. However, when an employee does not work overtime, his prorated TCOLA is equivalent to his TCOLA, because the derivation of the prorated TCOLA is merely the reverse of the generation of the TCOLA payment.

. Throughout this opinion, we will refer to the 40-hour workweek as the "basic" workweek. We will refer to an employee’s hourly wage (exclusive of the TCOLA or the overtime premium) as the "base rate” of pay. Finally, we will refer to the base rate paid during the basic workweek as "basic pay.”

For example, if a postal employee earns a normal wage of $ 10/hour before receiving either overtime or the TCOLA, and works 50 hours in a week, his "basic” workweek is 40 hours, his “base rate” is $ 10/hour, and his “basic pay” is (40 hours x $ 10/hour) = $400.

. For clarity, we use “TCOLA" to refer to either a percentage of the base rate, such as "25%,” or an hourly wage, such as “$2.50/hour.” We use “TCOLA payment" or “TCOLA payments" to refer to the sum of the TCOLA paid over 40 hours, such as "$100.”

TCOLA payments remain constant for any overtime week because the TCOLA is paid only for the first 40 hours. Accordingly, the TCOLA payment can be seen as a lump-sum bonus, which by statute is paid in full to the employee during the basic (40-hour) week. See infra at 596-98.

. This $2.50/hour contribution to the regular rate is identical to the TCOLA itself, because in this example the employee works 40 hours, and has the TCOLA added to his salary in each hour he works.

. The Office of Personnel Management (formerly the Civil Service Commission) administers the Act for most federal entities, but the Department of Labor administers the Act for the Postal Service. See 29 U.S.C. § 204 (f) (1988); 5 C.F.R. § 551.102 (b)(2) (1991).

.This dismissal has not been appealed.

. See supra note 2.

. Referring back to its first formula, the Postal Service would argue that the TCOLA, [B], must be divided into basic and overtime components. For example, an employee who works 60 hours receives 2A (4%o) of the TCOLA in basic pay, and the remaining 'A (2%o) in overtime pay. An employee who works 80 hours receives I/2 (“/so) of the TCOLA in basic pay, and the remaining 1A (“/so) in overtime pay.

. We will refer to the Postal Service’s version of the TCOLA as the "prorated TCOLA.”

. Our holding is limited to the TCOLA. Postal employees (and other employees covered by the *598 Act) receive other forms of differential pay, such as Sunday or night pay. The Postal Service’s formula prorates these payments as well, treating them as if they were earned equally in each hour of the workweek. See Brooks, 730 F.Supp. 1132 . Our holding is based on Congress’ intent in enacting the TCOLA statute. Accordingly, we do not reach the validity of the Postal Service's practice with respect to other forms of differential pay.

. The district court dismissed the portion of McQuigg’s complaint relating to the period before June 15, 1983, and McQuigg has not appealed that dismissal. See supra note 5.