Regulations

DOL Proposes New Rule Clarifying FLSA Regulations

DOL Proposes New Rule Clarifying FLSA Regulations

For the first time in over 50 years, the U.S. Department of Labor’s (DOL) Wage and Hour Division has proposed a new rule to clarify the regular earning rate requirements under section 7(e) of the Fair Labor Standards Act (FLSA).

Under the FLSA, employers are required to provide overtime pay of at least one and one-half times the regular rate of pay for hours worked beyond 40 hours in a given work week. The regular rate requirements in the FLSA explain what payment employers can include and exclude when calculating overtime rates for employees.

The rule proposes clarifications to confirm whether employers can exclude the following criteria from an employee’s regular rate of pay:

  1. The cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
  2. Payments for unused paid leave, including paid sick leave;
  3. Reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
  4. 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;
  5. Discretionary bonuses;
  6. Benefit plans, including accident, unemployment, and legal services; and
  7. Tuition programs, such as reimbursement programs or repayment of educational debt.

Also included in the proposed rule are clarifications pertaining to employee meal periods and “call back” pay.

The current rules discourage employers from offering perks to employees because the perks can hinder an employee’s actual earning rate. The DOL states that this particular rule “primarily focuses on clarifying whether certain kinds of perks, benefits, or other miscellaneous items must be included in the regular earning rate.”

The DOL estimates that the potential benefits with the proposed rule could result in reduced litigation costs of $281 million over the next 10 years. Additionally, the DOL estimates that the rule could result in one-time regulatory familiarization costs of $36.4 million.

The DOL website invites interested parties to submit comments on the proposal at https://www.regulations.gov in the rulemaking docket RIN 1235-AA24 by May 28, 2019. Only comments received during the comment period will be considered part of the rulemaking record.

The DOL says it will consider all timely comments in developing any final rule.

Summary
DOL Proposes New Rule Clarifying FLSA Regulations
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DOL Proposes New Rule Clarifying FLSA Regulations
Description
A new rule proposed by the Wage and Hour Division could clarify regular earning rate requirements in the Fair Labor Standards Act.
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First Capitol Consulting,Inc
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