The DOL’s New Rule That Might Affect Your Rate of Pay

Last Thursday, the United States Department of Labor (DOL) announced a proposed rule to amend an existing employee rate requirement under the Fair Labor Standards Act (FLSA). The current rule requires employers to offer overtime pay of at least one and one-half times the regular rate of pay for hours in excess of 40 hours per workweek. However under the current rule, defining how employers can offer overtime pay to their employees remains relatively ambiguous. As a means of compensation, some employers will provide “company perks” instead of hourly pay, with the monetary value of the perk being equivalent to their employee’s rate of pay. This could include bonuses, paid time off, travel reimbursement, a company car, etc. Currently, the DOL discourages the use of perks not included in an employee’s rate of pay. The proposed rule will seek to specify the exclusions, and will focus on clarifying whether certain kinds of perks, benefits, or other miscellaneous items must be allowed in an employee’s regular rate. 

 The new regulations announced by the DOL lists the following as clarifications that employer’s may exclude from an employee’s regular rate of pay:

  1. The cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
  2. Payments for unused paid leave, including paid sick leave;
  3. Reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
  4. 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;
  5. Discretionary bonuses;
  6. Benefit plans, including accident, unemployment, and legal services; and
  7. Tuition programs, such as reimbursement programs or repayment of educational debt. 

The proposed rules will also clarify other issues, such as when meal periods and “on call” time must be paid. Employers and employees should keep in mind that these new regulations will not officially be enforced until the rule is implemented as law, which can take up to a few months.

Disclaimer: The materials available on this page are for informational purposes only and not for the purpose of providing legal advice. If you still have questions about an employment-related matter, it would be best for you to contact an attorney to obtain advice with respect to any issue or problem. Use and access to this website or any of the links contained within the site does not create an attorney-client relationship.


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