The Department of Labor (DOL) recently announced what qualififies as compensation. This is the first significant update to the regulations governing regular rate requirements under the Fair Labor Standards Act (FLSA) in over 50 years.
The previous guidance left employers uncertain about the role that perks and supplemental benefits play when calculating the regular rate of pay. The new rule clarifies which perks and additional benefits should not be included in the regular rate of pay.
The DOL clarifies the regulations to confirm that 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;
- 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, accredidation 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;
- 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.
For more information about this announcement, please follow the below link: