Friday, February 14, 2020

New Overtime Rules & Regular Rate Regulations Part 2

Late in 2019, the Department of Labor issued two final rules updating and revising the regulations under the Fair Labor Standards Act (FLSA) governing overtime and regular rate regulations.  These rules became effective in January 2020 and the second final rule is summarized below.
The second final rule was effective January 15, 2020.  This rule updated regulations governing regular rate requirements under the FLSA and is the first significant update to those regulations in over 50 years. 
The FLSA generally requires that covered, nonexempt employees receive overtime pay of at least one and one-half times their regular rate of pay for any hours worked in excess of 40 hours per workweek.  An employee’s regular rate includes all remuneration for employment, subject to eight exclusions.
The new rule clarified which perks and benefits must be included in the regular rate of pay, as well as which perks and benefits an employer may provide without including them in the regular rate of pay.  Under the new rule, the following may be excluded from an employee’s regular rate of pay:
·       The cost of providing certain parking benefits, wellness programs, onsite specialist treatment, gym access and fitness classes, employee discounts on retail goods and services, certain tuition benefits (whether paid to an employee, an education provider, or a student-loan program), and adoption assistance;
·       Payments for unused paid leave, including paid sick leave or paid time off;
·       Payments of certain penalties required under state and local scheduling laws;
·       Reimbursed expenses including cell phone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred “solely” for the employer’s benefit;
·       Certain sign-on bonuses and certain longevity bonuses;
·       The cost of office coffee and snacks to employees as gifts;
·       Discretionary bonuses, and the rule clarifies that the label given a bonus does not determine whether it is discretionary and provides additional examples;
·       Contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.
As these rules are now in effect, be sure you evaluate them to determine if they affect you or your business.  Call us at (219) 769-3616 with your questions, or email them to

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