The Department of Labor issued a final rule clarifying which types of compensation must be included in determining an employee’s “regular rate” of pay. The final rule, which takes effect on Jan. 15, 2020, incorporates several ABA-advocated changes.
The calculation of an employee’s regular rate of pay is important because, under the Fair Labor Standards Act, banks and other employers must pay an employee 1.5 times the employee’s regular rate of pay for any hours in excess of 40 hours that the employee works in a workweek, unless that employee is exempt from overtime requirements. An employee’s regular rate of pay may differ from the employee’s hourly rate of pay because the regular rate includes certain payments and benefits provided to the employee.
DOL’s final rule clarifies that tuition assistance, benefit plan contributions, certain sign-on bonuses and the cost of providing wellness programs, gym access and coffee and snacks may be excluded from the regular rate. The final rule also incorporated several changes that the American Bankers Association advocated for as part of the industry coalition that submitted comments under the Partnership to Protect Workplace Opportunity. As ABA had urged, the final rule excludes student loan repayments and adoption assistance from the regular rate, and clarifies that travel reimbursement that follows the Internal Revenue Services’ guidelines is per se reasonable.
