As anyone who has ever tried to properly calculate overtime can attest, the question of what compensation should properly be included in an employee’s regular rate of pay is a vexing one. On March 28, 2019, the United States Department of Labor proposed new rules that may add some clarity.
The “regular rate” of pay is the base number that employers must multiply by 1.5 to determine how much overtime compensation is owed to an employee for hours worked in excess of 40 in a workweek.
The proposed rules would clarify existing FLSA regulations to confirm that employers may exclude the following items from an 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 permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements;
- discretionary bonuses;
- Benefit plans, including accident, unemployment, and legal services; and
- Tuition programs, such as reimbursement programs or repayment of educational debt.
The Notice of Proposed Rulemaking (NPRM) will publish on March 29, 2019 in the Federal Register, at which time interested parties may submit comments on the proposal at www.regulations.gov in the rulemaking docket RIN 1235-AA24 by May 28, 2019.