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Update Made to Regular Rate Calculation

rate calculation

1 minute read

The Department of Labor announced a new final rule which clarifies how to calculate an employee’s regular wage rate under the Fair Labor Standards Act (FLSA). The final rule will be effective starting January 15, 2020.

The first step in determining an employee’s overtime compensation is calculating the regular rate. Under the FLSA, an employee’s regular rate includes all forms of compensation paid to that employee in a workweek. The final rule clarifies what qualifies as compensation.

Calculating the regular rate includes all of an employee’s remuneration for employment including employee’s wages, commissions, bonuses, and premium payments. Items that are excluded include overtime pay, paid time off including compensation for sick days, holidays, and vacation, and the employer’s cost of providing employee benefits.

The last update to the regular rate calculation instructions was made over 60 years ago. Employers should become familiar with this final rule and adjust their payroll practices to account for this new guidance by January 15, 2020.

Download the bulletin for more details.

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National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Bill Enright

Bill Enright

Bill Enright believes in bottom-line honesty while empowering his customers with the knowledge they need to feel confident in their decisions. He is a 30+ year veteran with employee benefits expertise from insurance carrier to benefits consultant. Bill has been published on the topic of healthcare reform and has served on advisory committees and insurance reform lobbying groups at the state and national level. As an Employee Benefit Consultant in the Midwest Region, Bill will be working with both public and private sector schools, cities, and counties in Wisconsin. He is a licensed insurance agent and is a Certified Patient Protection and Affordable Care Act Professional (National Association of Health Underwriters).