This article discusses the proposed new rules on the Fair Labor Standards Act (FLSA)’s regular rate of pay requirements by the Department of Labor (DOL). If and when the final rules are issued, this revision would be the first substantive change to the DOL’s regular rate guidelines in 50 years.
Since its passage in 1983, courts have struggled to interpret the meaning of “the regular rate” and the correct measure of overtime owed to employees under the FLSA. The legal risk of failing to properly include an item of compensation in the regular rate is high – employers that get it wrong may be subject to claims for unpaid overtime compensation. And since California law incorporated the federal definition of the regular rate, failure to calculate the regular rate under the FLSA could also lead to lawsuits under the California wage and hour law.
Employers with overtime-eligible employees should closely watch for the DOL’s final new regular rate rules.
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