DOL is Publishing Final Rule on Regular Rate Under the FLSA
On December 12, 2019 the Wage and Hour Division of the Department of Labor announced a final rule impacting the calculation of the regular rate of pay. The regular rate of pay is the hourly amount upon which overtime under the Fair Labor Standards Act must be calculated. There has been a lack of clarity over the years over what benefits and other perks must be included when determining the regular rate of pay and which may be excluded from the calculation.
While the final rule is very lengthy, it does provide some valuable guidance to employers. For example, employers may exclude the following from an employee’s regular rate of pay:
- Certain parking benefits
- Wellness programs
- Adoption assistance
- Certain tuition benefits
- Certain reimbursed employee expenses
- Certain sign-on bonuses
- Certain longevity bonuses
The final rule also provides examples to demonstrate what bonuses are properly excludable as “discretionary” bonuses.
The final rule was published on December 16, 2019 and effective on January 15, 2020. Employers are encouraged to review this long-awaited guidance to avoid miscalculations of the regular rate of pay and to take advantage of properly excludable benefits and perks.