“Regular Rate” of Pay to Change in January 2020

It’s been 50 years since the US Department of Labor has updated the context of “regular rate of pay,” but that will finally change beginning January 15th, 2020.

As an employer, you now have the ability to boost perks of your choosing. This allows owners to offer certain bonuses without having to factor their value into overtime wages.

According to the DOL, employers may exclude the following from an employee’s regular rate of pay:

  • 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;
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  • 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 sign-on bonuses and certain 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.

The regular rate currently includes workers hourly wages/salaries for particular workers. Although it excludes “health insurance, paid leave, holiday and other discretionary bonuses.”

For more information, visit the final ruling posted on the DOL’s website