Wage and Hour Division Issue Final Rule for Regular Rate Under FLSA

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Last week the Wage and Hour Division (WHD) announced a final rule that helps to clarify the role perks and benefits play when calculating the regular rate of pay, making it easier for employers to compensate employees. The Rule promotes compliance with the Fair Labor Standards Act (FLSA) and encourages employers to provide additional benefits to employees that reflect today’s workplace.

This Rule is the first significant update to the regulations governing the regular rate requirements under the FLSA in more than 50 years. Until now, employers were often uncertain about the rules and what forms of payment should be included and excluded in the FLSA “time and one-half” calculation when determining overtime rates.

This update focuses on explaining which perks, benefits, and other miscellaneous payments must be included in the regular rate of pay. Also, the Rule offers employers guidance, which encourages employers to provide contemporary benefits to their employees without fear of costly litigation.

The Final Rule will become effective on January 15, 2020.