New Jersey Partner Issues Employment Alert on DOL “Regular Pay” Under FLSA

Partner Kathleen Collins has issued a Litchfield Alert, “Department of Labor Clarifies ‘Regular Pay’ Under Fair Labor Standards Act” regarding upcoming rules of standard of “regular pay” as defined under the Fair Labor Standards Act (FLSA).

Details

Under the current interpretation, regular pay includes hourly wages and salaries for non-exempt employees, shift differentials, commissions, on-call pay and most bonuses while it has excluded health insurance, paid leave, holiday and other discretionary bonuses, and certain gifts.

Effective January 15, 2020, employers will have more flexibility in determining which perks they can include in “regular pay” under the FLSA and the Department of Labor (DOL) has clarified that employers may then exclude the following perks from their calculation of the regular rate of pay:

• Discretionary bonuses
• Certain sign-on and longevity bonuses
• Unused paid leave
• Complimentary office coffee and snacks
• Contributions to benefit plans for accidents, unemployment, legal services and other events that could cause a financial hardship or expense in the future
• Parking benefits, wellness programs, onsite specialist treatments, gym access and fitness classes, employee discounts on retail goods and services, certain tuition benefits, and adoption assistance
• Business expense reimbursement for items such as cellphone plans, credentialing exam  fees, organization membership dues, and travel expenses that don’t exceed the maximum travel reimbursement under the Federal Travel Regulation system or the optional IRS substantiation  amounts for certain travel expenses
• Certain penalties employers must pay under state and local scheduling laws

Summary

The Department of Labor (DOL) Act will go into effect on January 15, 2020, enabling employers to exclude a number of existing perks from their employees’ regular rate of pay. Employers should review the changes to determine whether any of the clarifications are applicable.

To read the full document published by the DOL, please click here. To read Kathleen’s Litchfield Alert, click here.

For additional information, assistance or counsel for reviewing your employment and labor policies please contact one of our attorneys or Kathleen Collins directly.

Kathleen J. Collins draws on her more than 25 years’ experience in complex commercial litigation involving employment, commercial and residential construction, mass toxic tort and environmental matters. She has engaged in a multi-state civil litigation practice with an emphasis on defending all types of claims from initial filing to trial and appeal. Kathleen is national counsel for a top manufacturing company with a presence in the US and internationally and she has experience with international treaties in relation to her defense of multinational corporations. Her practice also includes consumer fraud, premises liability, and commercial and personal automobile claims.

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