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DOL Clarifies Regular Rate

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For the first time in 50 years the Department of Labor has issued a Final Rule attempting to clarify the overtime regular rate. The Final Rule focuses primarily on clarifying whether certain kinds of benefits or “perks,” and other miscellaneous items must be included in the regular rate. Since the DOL’s last overtime regular rate revision, the workplace has changed significantly, with compensation practices being one of those areas leading the way. For years employers have been left to their own interpretation in determining whether newer “perks”, like wellness benefits, fitness classes, cell phone reimbursements or snacks must be included in the overtime rate. The DOL’s final rule issued on December 12, 2019 seeks to clarify those issues.

Significantly, the Final Rule makes clear that employers may exclude certain “perks” from the regular rate. Perks such as wellness benefits, parking benefits, certain sign on bonuses, cell phone reimbursements and coffee or snacks provided to employees do not need to be included in the overtime base rate. The Final Rule will publish on December 16, 2019, in the Federal Register, with an effective date of January 15, 2020.

Employers should review their employee benefit packages to see whether any “perks” they provide employees may be excluded from the overtime regular rate. 

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