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 dvanprooyen@swartz-retson.com.
