The U.S. Department of Labor (DOL) recently sent a final rule on which perks must be included in workers’ regular rate of pay to the White House Office of Management and Budget (OMB).
The details of the final proposal have yet to be made available to the public. An earlier version which was made public in March 2019 would exclude the following benefits from the definition of regular rate:
- 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 regulations and that satisfy other regulatory requirements;
- discretionary bonuses;
- Benefit plans, including accident, unemployment, and legal services; and
- Tuition programs, such as reimbursement programs or repayment of educational debt.
The proposed rule also includes additional clarification about other forms of compensation, including payment for meal periods, “call back” pay, and others.
Employers often improperly exclude compensation from the regular rate when determining overtime premiums. The most common mistakes relate to non-discretionary bonus and incentive programs. Many employers also fail to properly account for piece rate work when determining overtime pay. Neither of these common mistakes are expected to be excluded under the new rule.
It is unknown if and when this proposed rule will be approved and made available to the public.
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