In late March, the U.S. Department of Labor announced a proposed rule to amend and update their regular rate requirement under the Fair Labor Standards Act (FLSA).
The FLSA generally requires overtime pay of at least one and one-half times the regular rate of pay for hours worked in excess of a 40 hour workweek. Regular rate requirements define what forms of payment employers include and exclude in the “time and one-half” calculation when determining workers’ overtime rates.
The proposed rule focuses primarily on clarifying whether certain kinds of perks, benefits, or other miscellaneous items must be included in the regular rate. Because these regulations have not been updated in decades, the proposal would better define the regular rate for today’s workplace practices.
The Department proposal includes clarifications to the regulations to confirm that employers may exclude the following from an employer’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 sick leave;
- Reimbursed expenses, even if not included “solely” for the employer’s benefit;
- Reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements;
- Discretionary bonuses;
- Benefit plans, including accident, unemployment and legal services;
- Tuition programs, such as reimbursement programs or repayment of educational debt.
The Notice of Proposed Rulemaking was included in the 29 March, 2019 Federal Register, interested parties may submit comments on the proposal at www.regulations.gov in the rulemaking docket RIN 1235-AA24. The deadline to do so is May 28, 2019.
