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FLSA: Regular Rate Calculation Final Rule

It's been more than 50 years since the Department of Labor updated the FLSA definition of regular rate of pay, but as of January 15, 2020, the FLSA has announced a final rule regarding which perks can be included in the regular rate of pay.

As you may know, this determines how to calculate overtime premiums under the FLSA. Previously, companies were reluctant to extend company benefit packages because of the possible effects on premiums. However, this change encourages employers to offer benefits without worrying about the repercussions. There are several exemptions to keep in mind when deciding on the benefits you would like to offer your employees. Below is a list of the exemptions/options for benefits to offer:
  • Certain parking benefits, wellness programs, onsite specialist treatment, gym access, fitness classes, employee discounts on retail goods and services, certain tuition benefits, and adoption assistance
  • Payments for unused paid leave including paid sick leave or paid time off
  • Payments of certain penalties required under state and local scheduling laws
  • Reimbursed expenses including cellphone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred "solely" for the employer's benefit; and clarifies that reimbursements that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System or the optional IRS substantiation amounts for travel expenses are per se "reasonable payments"
  • Certain sign-on bonuses and certain longevity bonuses
  • The cost of office coffee and snacks to employees as gifts
  • Discretionary bonuses, by clarifying that the label given a bonus does not determine whether it is discretionary and providing additional examples
  • Contributions to benefit plans for accidents, unemployment, legal services, or other events that could cause future financial hardship or expense.

Why Extend Employee Benefits?

With this final rule, it's easier than ever to offer additional benefits to your employees. What are some other reasons you should investigate more extensive benefits? According to , there are several reasons to offer benefits, but it all comes down to wanting to keep people invested in your company, thus making your employees happier and attracting the right kind of people. By offering employee benefits, you are likely to:

  • Increase your appeal
  • Decrease your turnover rate
  • Boost morale
  • See better performance
  • Have healthy employees
Do you have other questions related to this or other topics? Contact us for HR services or with any questions you may have!
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