Labor Department Tweaks Overtime Calculations

Proposed rule would update the “regular rate requirements” and allow employers to add more benefits without consequences.

April 02, 2019

WASHINGTON, D.C. - The U.S. Department of Labor proposed changes to overtime pay regulations last week that would update the “regular rate requirements” for the first time in more than 50 years, the Nation’s Restaurant News reports.

The “regular rate” requirements determine what forms of payment employers must consider when calculating the “time and a half” pay rate for overtime eligible workers. Under current law, employees who work more than 40 hours per week must be paid overtime if they have a salary below $455 per week, or $23,660 annually.

“The [new] regular rate proposal would provide clarity for employers to allow them to add more benefits to their employees without unknown overtime consequences or litigation,” said Keith Sonderling, acting administrator for the Labor Department’s wage and hour division, in a statement. “This proposed rule offers a positive path forward to employers and employees alike.”

Labor officials say employers often need clarification on how to determine regular pay rates. Currently, employers are discouraged from offering more perks to employees like wellness programs, tuition reimbursement and unused sick leave. This confusion and lack of clarity has given plaintiffs’ attorneys an opportunity to sue employers.

The rule is open for public comment until May 28.