Should Tuition Reimbursement or Payments for Unused Sick Leave Count When Calculating Overtime Under the FLSA?

U.S. Department of Labor Proposes New Rules to Help Clarify.

The United States Department of Labor has initiated administrative rule making procedures intended to clarify how to calculate the “regular rate of pay” under the Fair Labor Standards Act (FLSA).

The FLSA generally requires overtime pay of at least one and one-half times the regular rate of pay for hours worked in excess of 40 hours per workweek, the code of federal regulations define what forms of payment employers must include and exclude in the “time and one-half” calculation when determining workers’ overtime rates.  The Department of Labor has proposed new rules which it expects will clarify how to calculate these rates of pay.

According to the Department of Labor when it announced the proposed new rules:

Under current rules, employers are discouraged from offering more perks to their employees as it may be unclear whether those perks must be included in the calculation of an employees’ regular rate of pay. The proposed rule focuses primarily on clarifying whether certain kinds of perks, benefits, or other miscellaneous items must be included in the regular rate. Because these regulations have not been updated in decades, the proposal would better define the regular rate for today’s workplace practices.

The proposed rule includes, but is not limited to, calculations based on the cost of providing wellness programs, gym access, payments for unused paid leave (including paid sick leave), discretionary bonuses, tuition reimbursement and student loan repayment benefits.

The public may comment on the proposed rule through the end of May 28, 2019.  After that, the Department will review and respond to the comments before drafting a proposed final review.  Following any legal challenges and after Congressional review, the final rule may go into effect.

The new rule may impact the benefits School Districts are willing (or unwilling) to extend to its FLSA non-exempt employees.  The Labor attorneys at Hodges, Loizzi, Eisenhammer, Rodick & Kohn, LLP will help keep Districts apprised of changes to the federal rules.

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