Change is in air regarding FLSA and overtime pay; get upwind of it now.
Back in March, the U.S. Department of Labor (DOL) announced a proposed rule to update regular rate requirements under section 7(3) of the Fair Labor Standards Act (FLSA). The final rule, setting a new salary threshold for white-collar exemptions to overtime pay, is expected to be announced soon; and employers should start planning now to comply.
Specifically, the DOL proposes clarifications to the regs to confirm that employers may exclude the following from an employee’s regular rate of pay:
- 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 that don’t 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.
FLSA generally requires overtime pay of at least one and one-half times the regular rate of pay for hours worked in excess of 40 hours per work week. Regular rate requirements define what forms of payment employers include and exclude in the “time and one-half” calculation when determining workers’ overtime rate. Currently, the rules discourage employers from offering more perks to their employees as it may be unclear whether those perks must be included in the calculation of an employee’s regular pay rate. The proposed rule, the first attempt to update this in decades, focuses more on clarifying whether certain perks, benefits, or other items must be included in this rate.
Watch future issues of InFront for developments on this final rule.
