Friday, March 29, 2019

Proposed OT Rule Also Clarifies Regular Rate Definition

As most employers know, the Department of Labor has taken another stab at proposing a new rule raising the threshold salary for white collar exemptions. Under the proposed rule, the minimum salary will increase from $23,660 to $35,308. Equally important to note is that the proposed rule also clarifies payments to be included when calculating the regular rate of pay. As readers know, the FLSA requires calculation of overtime as one and one-half of the employee’s regular rate of pay.

Under the proposed rule, employers may exclude the following from an employee's regular rate of pay:

  • 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 under the Federal Travel Regulation System and that satisfy other regulatory requirements; 
  • Discretionary bonuses, by providing additional examples and clarifying that the label given a bonus does not determine whether it is discretionary; 
  • Benefit plans, including accident, unemployment, and legal services; and 
  • Tuition programs, such as reimbursement programs or repayment of educational debt.

Among other things, the proposed rule would also clarify (in Parts 778.218(b) and 778.320) that pay for time that would not otherwise qualify as hours worked, including bona fide meal periods, may be excluded from an employee's regular rate unless an agreement or established practice indicates that the parties have treated the time as hours worked.

The proposed rule should be published today, after which it will undergo a comment period. The DOL may or may not revise the proposed rule after the comment period.