U.s. Department Of Labor Issues
Final Rule On Regular Rate Under The Fair Labor Standards Act
The regular rate determines how much non-exempt employees covered by the FLSA receive in overtime pay, as the Act generally requires overtime pay of at least one and one-half times the regular rate for time worked in excess of 40 hours per workweek.
The Final Rule, which went into effect January 15, 2020, focuses primarily on clarifying whether certain kinds of benefits or “perks,” and other miscellaneous items must be included in the regular rate. Because these regulations have not been updated in decades, the Final Rule will better define the regular rate for today’s workplace practices and will allow employers to more easily offer perks and benefits to their employees.
The newly adopted regulation states that employers may exclude the following when determining an employee’s regular rate of pay:
- Cost of providing certain parking benefits, wellness programs, onsite specialist treatment, gym access and fitness classes, employee discounts on retail goods and services, certain tuition benefits (whether paid to an employee, an education provider, or a student-loan program), and adoption assistance
- Payments for unused paid leave, including paid sick leave or paid time off
- Payments of certain penalties required under state and local scheduling laws
- Reimbursed expenses including cellphone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred “solely” for the employer’s benefit; and clarifies that reimbursements that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System or the optional IRS substantiation amounts for travel expenses are per se “reasonable payments”
- Certain sign-on bonuses and certain longevity bonuses
- Cost of office coffee and snacks to employees as gifts
- Discretionary bonuses, by clarifying that the label given a bonus does not determine whether it is discretionary and providing additional examples
- Contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense
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