Department of Labor Issues Final Rule on What Perks Can be Included in "Regular Rate" of Pay
The U.S. Department of Labor announced its final rule on what perks employers can exclude from the regular rate of pay calculation. This ruling will take effect on January 15, 2020 and is the first significant update in over 50 years to the regulations under the Fair Labor Standards Act (FLSA) that govern the regular rate requirements.
According to the agency's website, employers may exclude the following form an employee's regular rate of pay:
- 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.
For more information see the links below.
- Press Release from the U.S. Department of Labor: DOL Issues Final Rule to Update the FLSA's Regular Rate Regulations
- Final Rule: Regular Rate Under the Fair Labor Standards Act (Department of Labor)
- Fact Sheet: Final Rule to Update the Regulations Governing the Regular Rate Under the FLSA
Please contact a member of Barrett McNagny's Labor and Employment group with any questions.