DOL to Update Rules for Calculating Overtime

May 11, 2018

The U.S. Labor Department plans to update and clarify its rules for how to calculate overtime payments in numerous complicated situations that often trip up employers.

Employers often point to uncertainties regarding overtime rates on prizes, awards, bonuses and other payments because of ambiguity in the current rules.  The proposed rule will likely clarify what types of compensation can be excluded from the “regular rate” in calculating time-and-a-half overtime premiums.

The rule will also address when no work is performed due to vacation, holiday, illness, and when expenses are reimbursed by an employer, or other similar payments made to an employee which are not considered compensation for hours worked.

The definition of “regular rate of pay” has not been updated in almost 40 years despite compensation practices having evolved considerably since then.

The proposed rule is expected in September 2018, but that date could slide, as they often do.