The U.S. Department of Labor (DOL) has issued a Final Rule updating regulations pertaining to how overtime pay is calculated. This marks the first time in over 50 years that these regulations have been significantly updated, and as we’ll see below, a lot can change in that time frame.
Perks and benefits that once made up a small percentage of an employee’s pay now make up a significant portion of their total compensation. Employers in the construction industry need to stay informed about current regulations regarding what can be lawfully excluded from an employee’s rate of pay. The DOL’s Final Rule comes in at an impressive 162 pages. Fortunately, the Ft. Myers construction lawyers are here to discuss the important takeaways.
Published on Dec. 16, 2019, the Final Rule clarifies how perks and benefits play into calculating overtime pay for nonexempt employees — a role that was unclear in years past. Under the update, employers may exclude the following from their employees’ regular rate of pay:
- Parking spaces
- Restrooms and lockers
- On-site medical care
- Gym access and membership
- Wellness programs (nutrition classes, mental health wellness programs, stress reduction programs, etc.)
- Employee discounts
- Tuition benefits (so long as they are not based on hours worked or services rendered)
- Adoption assistance
- Payments for unused paid sick leave or paid time off
- Reimbursed expenses (phone plans, licensing exams, travel, etc.)
- Certain bonuses
- Employee gifts (snacks, coffee, etc.)
- Contributions to benefit plans
- Discretionary bonuses (more on that below)
Bonuses: Discretionary or Nondiscretionary?
The Final Rule also states that neither the label given to a bonus nor the reason it was paid determines whether it is discretionary or nondiscretionary. The Final Rule even goes on to provide several examples of discretionary (excludable) bonuses, including “employee-of-the-month bonuses, bonuses to employees who made unique or extraordinary efforts which are not awarded according to pre-established criteria, severance bonuses, bonuses for overcoming stressful or difficult challenges.” Nondiscretionary bonuses, on the other hand, are “paid pursuant to a prior contract, agreement, or promise causing the employee to expect such payments regularly.”
Related: How to Legally Implement Bonuses
Preparing for the New Year
The DOL’s Final Rule comes into effect Jan. 12, 2020, giving employers time to take a look at their benefits packages and determine what would be impacted. With the update, your construction company may be in a position to expand perks and benefits to your valued employees. However, it remains your responsibility as an employer to withhold taxes from bonuses and notify payroll providers of altered exemptions. For assistance ensuring that your payroll practices are in compliance with state and federal law, consult a Ft. Myers construction lawyer from Cotney Construction Law.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.