by Angel Berberena, Esq. (Goldman Antonetti & Córdova, LLC)
The U.S. Department of Labor (U.S. DOL) recently announced a Final Rule (29 CFR Parts 548 and 778) updating regulations governing regular rate requirements under the Fair Labors Standards Act (FLSA) to provide clarity and better reflect the 21st-century workplace. This Rule aims to promote compliance with the FLSA, provide appropriate and updated guidance, and to encourage employers to provide additional and innovative benefits to workers without fear of costly litigation. In addition, the Final Rule defines what forms of payment employers may include and exclude in the FLSA’s «time and one-half» calculation when determining overtime rates and clarifies other forms of compensation, including payment for meals periods and «call back» pay.
Previously, employers were uncertain about the role that perks and benefits played when calculating the regular rate of pay. This Final Rule clearly states which perks and benefits must be included in the regular rate of pay and which may be provided without including them in the regular rate of pay.
Specifically, the following perks and benefits may be provided without risk of additional overtime liability:
- the cost of providing certain parking benefits, wellness programs, onsite specialist treatment, gym access and fitness classes, employee discounts on retail goods and services, certain tuition benefits (whether paid to an employee, an education provider, or a student-loan program), 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 and;
- contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.
The U.S. DOL estimates that these changes and clarifications will result in substantial savings, including reduced litigation costs. For employers in Puerto Rico, some of these provisions will need to be examined taking into consideration additional benefits provided under local law.
Disclaimer: Although the information included in this document may concern legal issues, it is not a legal opinion or professional advice and clients shall not use it as such. We assume no responsibility or liability of any kind for any information contained herein, and we expressly disclaim all liability for any claim for damages arising from the use, reference to, or reliance on, such information. If legal or other expert assistance is required, the services of a competent professional should be sought.