DOL Proposes Regular Rate of Pay Regulations

Published by Meg Vergeront on

The federal Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees overtime pay at 1½ times their “regular rate of pay” for hours worked over 40 in a workweek.  In calculating the regular rate of pay, employers must count all “remuneration for employment,” unless expressly excluded by the FSLA or DOL’s regulations implementing the FLSA.  Most of the regular rate of pay regulations have been in place for 50 years and have not kept up with benefits offered in the modern work place.  Therefore, the DOL has issued a proposed rule that would exclude the following benefits from the regular rate of pay:

  • The cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes;
  • Employee discounts on retail goods and services;
  • Payments for accrued but unpaid leave;
  • Reimbursed expenses;
  • Pay for off-duty meal periods, except if there is an agreement or course of conduct that establish that the employer and employee have treated the time as hours worked;
  • Contributions to benefits plans that provide accident, unemployment and legal services benefits;
  • Tuition programs, e.g., reimbursement programs or repayment of student loan debt.

The proposed rule would also clarify whether and when other forms of compensation must be included in the regular rate of pay.  The forms of compensation include holiday and weekend work premiums, discretionary bonuses, reporting time pay and call back pay.  The proposed rule also clarifies when penalties imposed on employers for violating “predicative scheduling laws” enacted by state and local governments may be excluded from the regular rate of pay. 

One of the goals of the proposed rule is to encourage employers to provide benefits without concern about whether the benefits will affect how much they have to pay in overtime.  The hope is that this will positively affect morale, compensation and employee retention. 

DOL will issue the final rule after a 60-day period for notice and comment.  Comments must be submitted by May 28, 2019. 

Filed Under: employment law

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