Friday, March 29, 2019

Another new DOL rule - this time, on the "regular rate"

Not official use.
Under the Fair Labor Standards Act (FLSA), an employer must generally pay a non-exempt employee an overtime premium for hours over 40 worked in a workweek. Overtime pay is equal to 1.5x (or 150% of) the employee's "regular rate."

This calculation can be easy - an employee who makes $8/hour gets $12/hour for overtime. Sometimes it's hard though. Employees receive all kinds of perks and payments and it can be difficult to calculate them into the regular rate (or know if you even need to).

Yesterday, the U.S. Department of Labor announced a new proposed rule to update regular rate calculations. DOL pointed to some highlights:
[E]mployers may exclude the following from an employee's regular rate of pay:
  • the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services; 
  • payments for unused paid leave, including paid sick leave; 
  • reimbursed expenses, even if not incurred "solely" for the employer's benefit; 
  • reimbursed travel expenses that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System and that satisfy other regulatory requirements; 
  • discretionary bonuses, by providing additional examples and clarifying that the label given a bonus does not determine whether it is discretionary; 
  • benefit plans, including accident, unemployment, and legal services; and 
  • tuition programs, such as reimbursement programs or repayment of educational debt. 
The proposed rule also includes additional clarification about other forms of compensation, including payment for meal periods, "call back" pay, and others.
The DOL is trying to incentivize employers to provide these "perks" without fear that they will have to include them in overtime calculations. Unfortunately, employers may still face this concern because many state laws also require an overtime premium; and, whether these perks are excluded from that calculation will depend on the state law.

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