Calculation of “regular rate” of pay is something which has long given employers fits, and the US Department of Labor (“DOL”) has taken a step which it hopes will clarify the definition, something which hasn’t been done in 50 years. On December 12, 2019 the Final Rule interpreting “regular rate” was announced.
Under the Fair Labor Standards Act (“FLSA”) employers are required to pay non-exempt workers time and one half the “regular rate” for every hour worked over 40. According to the regulations, the “regular rate” includes all remuneration paid to the employee except for certain payments specifically excluded under the FLSA. This would include wages paid by the hour, by salary, or by piecework and most bonuses, commissions, incentive pay, shift differentials, and on-call pay. Excluded payments, by definition, are premium payments for certain work (e.g. Sunday premium pay), discretionary bonuses, holiday gifts, and vacation pay.