In March 2019, the U.S. Department of Labor (DOL) suggested an update to the FLSA’s definition of “regular pay” in order to make it easier for employees to calculate employee overtime premiums. This proposal is supported by the Society for Human Resource Management (SHRM) because the changes will provide more clarity in the overtime calculation process, therefore making it easier for employers to offer benefits to their employees without fear of violating any standards.
Currently, the “regular rate” of pay is not clearly defined, and in order to avoid violation of the FLSA standards, employers are not offering certain benefits such as public transportation subsidies, tuition reimbursement, and more. The proposal by the DOL to clarify the meaning of “regular pay” should hopefully decrease uncertainty and encourage employers to offer such benefits without fear of a lawsuit.
As of now, overtime rate must be paid once employees work over 40 hours and that it must be at least 1 ½ times their regular rate. However, overtime rates also must include all payments for employment unless it falls under one of the statutory exceptions. For example, in addition to hourly wages and salaries, the regular rate also includes most bonuses, on-call pay, commissions and more. The DOL’s proposed amendment to the FLSA would clarify that the following benefits are excluded from the regular rate calculation: tuition reimbursement, employer-provided gyms, reimbursed expenses, and more.
Hopefully, once the proposed changes come into effect, employers will offer more benefits to their employees. The proposed changes should, at the very least, create clarity in the FLSA so employees are compensated fairly for their overtime work.