Clarification on regular rate and overtime calculations Email
Written by US Dept. of Labor   
Friday, December 20, 2019 01:00 AM

The U.S. Department of Labor issued a final rule on December 16 regarding the calculation of time-and-a-half overtime pay. Employers receive clarification on what should be included in the regular rate of pay.

From the Wage and Hour Division:

Specifically, the final rule clarifies that employers may offer the following perks and benefits to employees without risk of additional overtime liability:

  • 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 cellphone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred "solely" for the employer's benefit; and clarifies that reimbursements that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System or the optional IRS substantiation amounts for travel expenses are per se "reasonable payments";
  • certain sign-on bonuses and certain longevity bonuses;
  • the cost of office coffee and snacks to employees as gifts;
  • discretionary bonuses, by clarifying that the label given a bonus does not determine whether it is discretionary and providing additional examples and;
  • contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.

The final rule also includes additional clarification about other forms of compensation, including payment for meal periods and "call back" pay. It will take effect on January 15, 2020.

Read the final rule on the Federal Register. 

Read FAQs on the final rule.

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