How New DOL Requirements Could Impact Your Overtime Calculations in 2020
By Brenna Ramy, PHR, SHRM-CP
Just last month, the U.S. Department of Labor (DOL) announced new regular rate requirements (in the form of a “final rule”) under the Fair Labor Standards Act (FLSA). Generally speaking, an employee’s “regular rate” of pay is straight-time earnings represented as an hourly rate that includes all renumeration (i.e., wages) for employment. The new requirements governing this computation, effective January 15, 2020, primarily pertain to what types of compensation employers should—and should not—include when calculating an employee’s overtime pay.
The good news: The new requirements don’t significantly change existing regulations. Instead, they mostly clarify which employee benefits or perks must be included in the regular rate when calculating overtime pay. It’s important to note: This final rule is separate from the updated overtime regulations that went into effect on January 1, 2020.
Join us as we talk through what you can expect with the new regular rate requirements and overtime regulations.
If you’re an employer who had hesitated to provide certain benefits for fear of noncompliance with the FLSA, these new requirements will most certainly bring a sigh of relief.
Which benefits or perks can be excluded from an employee’s regular rate of pay?
Generally, payments that do not depend on hours worked, services rendered, job performance, or other criteria that depend on the quality or quantity of employees’ work do not need to be included in the regular rate.
Examples of these excluded payments include the following:
- Compensation for meal periods
- Discounts on employer-provided retail goods and services
- Discounts on hotel rooms and travel
- The cost of snacks, drinks, or a meal on a special occasion (but not regular meals)
- Parking spaces or benefits
- Adoption assistance
- The cost of small items such as coffee cups and t-shirts
- Accident, unemployment, and legal services benefits
- Payouts to employees of unused vacation and sick leave
- Holiday pay
What should employers do now?
Again, the new regular rate requirements should not cause you to throw your current overtime calculations out the window. Nevertheless, consider taking this opportunity to review how you’re calculating overtime. After all, making sure you’re in compliance with the FLSA is a great way to start the new year. And if you do find payments that were inappropriately excluded from your overtime calculation, have no fear—it’s a mistake that can easily be fixed.
Move forward with peace of mind.
If you have questions about these new regular rate requirements or the recently published overtime regulations, the AEM Workforce Solutions team is here to help. When you’re ready, we can provide guidance on how to conduct an audit of your regular rate and overtime pay and support you through your next steps. Contact us today to learn more.
Did you find this information helpful? Check out these other topics that may interest you:
By Leah Davis, CPA It’s no secret that the baby-boomer retirement wave is coming. In some organizations and local governments, it’s already washing ashore. What’s
Want to stay up to date on all of the topics we’re covering? Follow us on social media: