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Compliance Bulletin: DOL Updates Regular Rate of Pay Rules

On December 12, 2019, the Department of Labor (DOL) announced a new final rule to the Fair Labor Standards Act (FLSA) that clarifies the methodology to calculate an employee’s regular wage as it applies to the FLSA.  Calculating an employee’s regular wage is essential when determining whether an employee is considered an exempt or non-exempt employee under the minimum wage and overtime rules under the FLSA.  Additional information regarding the classification parameters of exempt or non-exempt status as well as the change to the salary limit for 2020 can be found in the prior article, “DOL Issues New Salary Limits for Overtime Exemptions.”

The final FLSA rule goes into effect on January 15, 2020 and assists in improving the initial rules of the FLSA that were established in the 1950s, and adds clarification of what should not be considered part of an employee’s regular wage.  The final rule will assist in clarifying the allowable calculation exclusions:

  • The cost for various employee “perk” benefits:
    • Parking benefits
    • Wellness programs
    • Onsite specialist treatments
    • Gym access, memberships, or fitness classes
    • Employee discounts
    • Education tuition programs
    • Adoption assistance
  • Payment for unused paid time off, including sick leave
  • Payments of penalties required under certain state and/or local scheduling laws
  • Reimbursement of expenses including, but not limited to:
    • Cell phone
    • Credential exam fees
    • Organization membership dues
    • Traveling
  • Certain sign-on and longevity bonuses
  • Cost of office amenities such as coffee and snacks to employees as gifts
  • Discretionary bonuses; and
  • Contributions to benefit plans for:
    • Accident
    • Unemployment
    • Legal services; or
    • Other events that could cause future financial hardship or expense

Read the Compliance Bulletin.

Contact your Cowden representative for more information on this or other compliance issues.