U.S. DOL Proposes Changes to Regular Rate of Pay for Overtime Purposes

The U.S. Department of Labor (DOL) recently proposed a rule that could have a significant impact on employers and how they assess overtime pay. The proposed rule deals with how employers go about figuring an employee’s regular rate of pay (RROP), which is used to help calculate whether an employee is exempt from overtime regulations.

Under the current rules, RROP is not limited to the employee’s base rate of pay; it also includes various bonuses, lead premiums, shift premiums, benefits, and other employee perks. These amounts increase the RROP and as a result increase the amount of overtime compensation an employee must be paid.

According to the DOL announcement, the proposed rule:

• Clarifies whether certain kinds of “employee perks,” benefits, or other miscellaneous payments must be included in the regular rate;
• Confirms that the cost of providing wellness programs, gym access and fitness classes, and employee discounts on retail goods and services may be excluded from an employee’s RROP;
• Confirms that payments for unused paid leave, including paid sick leave, may be excluded from an employee’s RROP; and
• Confirms that reimbursed expenses need not be incurred “solely” for the employer’s benefit for the reimbursements to be excludable from an employee’s regular rate.

LeadingAge NY will keep members abreast of this development and how it might interact with New York State labor regulations.

Contact: Meg Everett, meverett@leadingageny.org, 518-867-8871