The U.S. Department of Labor’s Wage and Hour Division recently announced a proposed rule updating regulations governing what items are included in an employee’s regular rate of pay. This constitutes the first update to the definition of the regular rate of pay in over fifty years.
Under the Fair Labor Standards Act, employers must pay nonexempt employees an overtime rate of at least one and one-half the employee’s regular rate of pay for hours worked in excess of forty per week. Regular rate of pay is not always the employee’s hourly rate of pay, but instead, “regular rate of pay” is a legal term of art. Under the current rules, there has been many questions concerning what benefits need to be included in the calculation of the regular rate. The new rule clarifies that the following items are excluded: