DOL Finalizes Rule Redefining Overtime Calculations
Labor & Employment @lert
Date: December 19, 2019
On December 16, 2019, the U.S. Department of Labor (DOL) published its final rule that substantially updates the “regular rate” of pay calculations for the first time in more than 50 years. The Fair Labor Standards Act (FLSA) requires that a non-exempt employee be paid “time and one-half” (1.5 times) the employee’s regular rate of pay, which the FLSA defines as “all remuneration for employment” divided by hours worked.
The updated regulations clarify the items employers may exclude from the regular rate and overtime calculation, which include:
- The cost of providing certain parking benefits, wellness programs, gym access and fitness classes, and employee discounts on retail goods and services.
- Certain tuition benefits, whether paid to an employee, an education provider, or a student-loan program.
- Payments for unused paid leave, including paid sick leave or paid time off.
- Reimbursed expenses, including cellphone plans, credentialing exam fees, organization membership dues and travel, even if not incurred “solely” for the employer’s benefit.
- Certain sign-on and longevity bonuses.
- Benefit plans, including accident, unemployment and legal services.
The final rule also clarifies and provides examples of discretionary bonuses that may be excluded from the regular rate. Finally, the DOL eliminated the standard that call-back payments (additional payments employers make to workers they call back to work after their shifts have ended) must be “infrequent and sporadic” to be excludable from an employee’s regular rate. Rather, such pay must be included only if it is “anticipated” or “prearranged.”
The DOL says the final rule will save workers and businesses approximately $280 million in litigation costs incurred in disputes over regular rate calculations. Employers should consider consulting with employment counsel to assess their pay practices and overtime calculations and determine the cost-saving areas of exclusion that will be available when the rule takes effect on January 15, 2020.
FOR MORE INFORMATION
For more information, please contact:
or any member of our Labor & Employment group.
This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel. This document may be considered attorney advertising in some jurisdictions.
© 2019 THOMPSON HINE LLP. ALL RIGHTS RESERVED.