DOL Proposes Revamp of the “Regular Rate”

By James Korte

The DOL continues to issue proposed rules to “modernize” the FLSA. The latest proposal, if finalized, would clarify and update the requirements for how employers calculate the “regular rate” of pay.  The “regular rate”  is the hourly rated used to calculate the overtime premium pay for non-exempt employees. The proposal:

  • provides more specific examples of exclusions from the “regular rate,” including exclusions for health and wellness programs, tuition benefit programs, and employee discounts on goods and services, among others; and
  • clarifies rules regarding “show up,” “call-back” pay, and paid meal breaks during which no work is performed.

Finally, the proposal increases the safe harbor for small nondiscretionary bonuses.  Ordinarily, a nondiscretionary bonus has to be factored into the hourly rate for all the weeks during which it was earned.  With the proposed rule, employers may skip this calculation if the additional overtime pay for the week would be less than 40% of the federal minimum wage.

The full proposal can be found here. The proposal is a win-win for both employers and employees, updating examples for employers with modern wage plans. The proposed rulemaking is not final and the DOL is taking public comments on the proposed regulation changes. For anyone would like to respond to the DOL’s proposals, comments will be accepted electronically or by mail. The instructions can be found at http://www.regulations.gov/