Earlier today, the U.S. Department of Labor (“DOL”) announced a proposed rule to update regular rate calculations under the Fair Labor Standards Act (“FLSA”). Under the FLSA, employers must pay overtime pay to employees who work more than 40 hours in a week. The overtime pay rate is one and a half times an employee’s “regular rate” of pay. However, as many employers know, calculating an employee’s regular rate is not as straightforward as it may seem.

The DOL has not implemented any significant changes to the regulations regarding regular rate of pay in several decades. Accordingly, the proposed rule will update the regulations to clarify whether common benefits offered in the modern workplace must be included in an employee’s regular rate of pay.

In an effort to encourage employers to provide more benefits to their employees, the proposed rule excludes the following from an employee’s regular rate:

  • The cost of providing onsite specialist treatments from chiropractors, personal trainers, counselors, etc.
  • The cost of providing gym access, gym memberships, and fitness classes
  • The cost of providing wellness programs, such as health promotions and disease prevention activities
  • Employee discounts on retail goods and services;
  • Payments for unused paid leave, regardless of the type of leave
  • Reimbursed travel or other expenses, even if not incurred “solely” for the employer’s benefit
  • Reimbursed travel expenses that do not exceed the amounts set forth in the Federal Travel Regulation
  • Certain types of bonuses, broadening the current meaning of “discretionary bonus”
  • Certain types of benefit plans, such as accident, unemployment, and legal services; and
  • Certain types of tuition programs, such as course discounts, tuition-reimbursement programs, and programs for repayment of educational debt.

The proposed rule also includes changes to the existing “call-back” pay and “basic rate” regulations.

Frantz Ward attorneys will monitor developments on the proposed rule throughout the comment period.

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Photo of Megan E. Bennett Megan E. Bennett

Megan focuses her practice on the representation of management in all aspects of labor and employment law. She assists in providing day-to-day counseling to employers by researching and recommending best practices for companies on human resources issues such as terminations, compliance with employment…

Megan focuses her practice on the representation of management in all aspects of labor and employment law. She assists in providing day-to-day counseling to employers by researching and recommending best practices for companies on human resources issues such as terminations, compliance with employment laws, workplace investigations, and the preparation of policies and employment agreements. Megan aids in the defense of employers in discrimination, harassment, retaliation, and various other employment-related claims before judicial bodies and administrative agencies. Megan assists clients across several industries in preparing annual affirmative action plans and defending against OFCCP audits.

During law school, Megan had hands-on experience, including serving as a Judicial Extern to the Honorable Judge Christopher Boyko of the U.S. District Court for the Northern District of Ohio, a Law Clerk for the Cuyahoga County Prosecutor’s Office, and a Legal Intern for the U.S. Department of Education, Office for Civil Rights. In addition, Megan was a Frantz Ward Summer Associate.

Prior to law school, Megan taught Kindergarten and Pre-Kindergarten in New York City through Teach for America. Megan holds a Master’s degree in Early Childhood Education from Lehman College of the City University of New York. Megan also has a Bachelor’s degree in Political Science and Communications from the University of Dayton.