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Department of Labor Adopts New Rule for Determining “Regular Rate” of Pay

January 13, 2020
For the first time in over 50 years, the Department of Labor has adopted a new rule that significantly updates the regulations governing the determination of an employee’s “regular rate” of pay under the federal Fair Labor Standards Act (FLSA). 
 
Determining the “regular rate” is generally a critical step in an employers’ payroll process, because the FLSA requires covered employers to compensate employees at one and one-half times their “regular rate” of pay for all overtime hours worked.

The previous regulations were often silent or ambiguous as to whether certain specialty pays or benefits should be included in the “regular rate.”  The new rule attempts to offer more clarity, addressing some of the more common types of benefits (such as parking and wellness benefits) and specialty pays (such as call-back pay, bonuses, and payments “in-lieu” of other benefits).

The new rule takes effect Jan. 15.  Cities with questions about the impact of this new rule on their payroll practices are encouraged to visit the Department of Labor’s webpage for more information and consult with their city attorney.


 
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