The U.S. Department of Labor (DOL) announced a proposed rule to clarify and update the regulations that govern regular rate of pay requirements under the Fair Labor Standards Act (FLSA) on Thursday.
It’s the first time in 50 years that a change to the definition has been proposed.
The FLSA’s regular rate requirements define what forms of payment employers include and exclude when calculating time and one-half overtime pay for an employee. The DOL said that because of uncertainty under the current rules, employers are “discouraged from offering more perks to their employees.”
“The regular rate proposal would provide clarity for employers to allow them to add more benefits to their employees without unknown overtime consequences or litigation,” said Keith Sonderling, acting administrator for the Department's Wage and Hour Division. “This proposed rule offers a positive path forward to employers and employees alike.”
The DOL proposes that employers may exclude the following from 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, which includes payment for meal periods and call back pay.
About the Author
Brett Christie is a staff writer at WorldatWork.