Taking Care of HR Business
        A blog from the attorneys of Verrill

        DOL’s Proposed Rule Making on Regular Rate of Pay

        April 1, 2019

        The U.S. Department of Labor’s Wage and Hour Division recently announced a proposed rule updating regulations governing what items are included in an employee’s regular rate of pay. This constitutes the first update to the definition of the regular rate of pay in over fifty years.

        Under the Fair Labor Standards Act, employers must pay nonexempt employees an overtime rate of at least one and one-half the employee’s regular rate of pay for hours worked in excess of forty per week. Regular rate of pay is not always the employee’s hourly rate of pay, but instead, “regular rate of pay” is a legal term of art. Under the current rules, there has been many questions concerning what benefits need to be included in the calculation of the regular rate. The new rule clarifies that the following items are excluded:

        • the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
        • payments for unused paid leave, including paid sick leave;
        • reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
        • reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements;
        • discretionary bonuses;
        • benefit plans, including accident, unemployment, and legal services; and
        • tuition programs, such as reimbursement programs or repayment of educational debt.

        In addition, the proposed rule provides clarifications about other forms of compensation, such as payment for meal periods and “call back” pay.

        The DOL notes that the proposed rule would “better define the regular rate for today’s workplace practices.” In practice, the rule would mitigate employer concerns about compliance with overtime pay requirements without compromising the incentives associated with providing valuable employee benefits.

        The sixty-day public comment period ends on May 28, 2019. In the meantime, we suggest you take a look at how you are currently calculating an employee’s regular rate of pay to determine if any of the above could affect your current practices. If you have any further questions about how the proposed rule may affect your company, or best practices concerning wage and hour issues, please contact a member of Verrill Dana’s Labor & Employment Practice Group.

        Taking Care of HR Business

        Human resource professionals, supervisors, and company executives are constantly confronted with a changing legal landscape. Verrill’s Taking Care of HR Business blog is designed to keep you informed about the latest and most significant legal developments that affect employers.

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