Finance News & Insights

Another one! Feds update regular rate of pay rules too

Your payroll staffers are going to be busier than usual! The Department of Labor (DOL) just announced it’s updating the Fair Labor Standards Act regs that control the regular rate of pay.

Of course that’s hot on the heels of upcoming changes to the overtime rules.

You had a good run with the old regs – they’ve been in place for the past 50 years.

So why update now, after all this time? The DOL says the new rules will better define a regular rate of pay for “today’s workplace practices.”

Here’s a breakdown of what’s coming so you’re confident your company remains in compliance.

What won’t go into the regular rate of pay

The main focus of the rule changes is to clarify which popular perks  you might offer your employees will end up making their checks larger when they rack up OT.

The good news for your budget? There are going to be a whole slew of them that won’t count toward those calculations.

Here’s a list of benefits you can safely exclude from employees’ regular rate of pay, according to the DOL announcement:

  • the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services
  • payments for unused paid leave, including paid sick leave
  • reimbursed expenses, even if not incurred “solely” for the employer’s benefit
  • reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regs and that satisfy other regulatory requirements
  • discretionary bonuses (nondiscretionary bonuses are fair game)
  • benefit plans, including accident, unemployment and legal services, and
  • tuition programs, such as reimbursement programs or repayment of educational debt.

Many of these are hot topics at the moment, from wellness programs to paid leave, so knowing that these won’t be factored into Payroll’s overtime calculations might inform your decisions on what you offer.

Plus it’ll help you make more accurate estimates of what these benefits and compensation strategies cost you.

Other scenarios addressed as well

Those aren’t the only things the new rule will address.

The DOL also said it will clarify about other forms of compensation, including payment for meal periods, “call back” pay, and others.

No official announcement on when the rule will go into effect. But the comment period is open until May 29, 2019 (go to regulations.gov in the rulemaking docket RIN 1235-AA24 if you wish to submit one).

We’ll update you as soon as the final rule is released.

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