DOL Pulls Ripcord—Proposed Rule Clarifying “Regular Rate” Parachutes In

Jason E. Reisman

Yesterday, as anticipated (see our prior blog post here), the U.S. Department of Labor (“DOL”) released its proposed guidance to clarify the rules regarding what is and is not required to be included in the “regular rate of pay” (“RROP”). Remember, the RROP is the rate used for the calculation of overtime pay to non-exempt workers.

Though completely unexpected when the DOL initially announced its plan to clarify these rules, employers will undoubtedly be pleased by the effort. Nothing—from the employer standpoint—is really ever perfect, but this is progress. Originally targeted to be released in December 2018, like many other DOL projects, it was delayed a bit.

According to the DOL’s announcement, this proposal attempts to clarify that employers can exclude the following from the RROP:

  • the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
  • payments for unused paid leave, including paid sick leave;
  • reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
  • reimbursed travel expenses that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System and that satisfy other regulatory requirements;
  • discretionary bonuses, by providing additional examples and clarifying that the label given a bonus does not determine whether it is discretionary;
  • benefit plans, including accident, unemployment, and legal services; and
  • tuition programs, such as reimbursement programs or repayment of educational debt.

Though we’re still working our way through the proposal, we are hopeful that it actually does address certain items that have long created quagmires for employers. Of course, the proposal will be subject to 60 days of public comment. Then, once the DOL reviews all comments, it will issue a final rule. Please stay tuned for further updates as this process continues!

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