Last week, the federal Department of Labor issued a new regulation updating how employers may calculate the “regular rate” for purposes of paying overtime compensation. The regulation makes explicit that certain types of compensation may be excluded from the regular rate, including paying out unused paid time off and sick time, paid meal breaks (with certain exceptions), certain longevity bonuses, tuition reimbursement, and other perks, etc. The new regulation will become effective on January 15, 2020. There is a lot going on in employee compensation in the next month because, as previously reported here, the minimum salary for exempt employees will also rise on January 1 to $35,568/year (or $684/week) and the Ohio minimum wage increases on January 1 to $8.70/hour.
As explained by the DOL, the new regulation will simplify the calculation of the regular rate by excluding perks that many employers provide to employees so that employers can avoid confusion and litigation, such as:
·
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
signing bonuses and 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.
NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.
