The USDOL is revising the definition of "Regular Rate of Pay"

Back in January, I wrote a post entitled What is the “regular rate of pay according to the USDOL.” At that time I explained that many employers made FLSA overtime mistakes because they did not calculate overtime on the correct rate of pay. The USDOL has introduced a proposal to revise and clarify the definition of “regular rate of pay”, to clarify how to calculate overtime and to allow employers more freedom to offer employees more in the form of benefits that don’t have to be included in determining overtime rates.

The Notice of Proposed Rule Making was published in the Federal Register on March 29, 2018.  As an employer, you are given the opportunity to comment on the new rule until May 28, 2019. You can submit written comments until that date. You may submit comments, identified by Regulatory Information Number (RIN) 1235-AA24, by either of the following methods: Electronic Comments: Submit comments through the Federal eRulemaking Portal at Follow the instructions for submitting comments. Mail: Address written submissions to Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210. 

The Notice

The new rule takes into account how the nature of work has changed and the many alternatives employers have in compensating employees. Additionally, it offers advice on how to deal with many new state regulations that have been passed due to the lack of guidance from the FLSA. According to the proposal the new rule:

The Department believes that its current regulations do not sufficiently reflect these and other such developments in the 21st-century workplace. In this NPRM, the Department proposes to update its regulations in part 778 to reflect these changes in the modern workplace and to provide clarifications that reflect the statutory language and WHD’s enforcement practices. In so doing, the Department intends to promote compliance with the FLSA; provide appropriate and updated guidance to employers with evolving worker benefits, including employers that offer paid leave; give clarity concerning the proper treatment of scheduling-penalty payments under the FLSA; and encourage employers to provide additional and more creative benefits without fear of costly litigation.

It is important to read and understand this new rule. Don’t make any changes yet, after all it is just currently a proposal and may yet change based on the feedback the USDOL get from the public.

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