FLSA Watch: U.S. Department of Labor Published Three New ‘Wage and Hour’ Guidance Letters
On March 26th, 2020, the United States Department of Labor (DOL) officially released three new opinions on Fair Labor Standards Act (FLSA) wage and hour issues. These opinion letters are one of the primary ways in which the agency provides employers and employees guidance on complex wage and hour matters.
All three of the opinions released by the agency pertain to ‘rate-of-pay’ calculations—which is the baseline figure that must be used to determine the correct value of an employee’s overtime pay. Here, our West Palm Beach employment law attorneys discuss the three FLSA letters released by the DOL.
Federal Guidance: Three Wage and Hour Issues
- Longevity Payments and Rate-of Pay Calculations
In the 1980s a city in Alabama passed a resolution offering “Longevity Awards” to all employees who worked for the municipality for at least five full years. The award in question was paid at a rate of $2 per month, per each year of service. In other words, an employee who worked for this employer for 20 years would be eligible to receive an additional $40 in monthly compensation in the form of a longevity award. Based on the fact that these longevity awards are earned by every employee who meets the criteria, the DOL advises that they must be included as part of a rate-of-pay calculation. When calculating overtime wages, a mandated longevity award should be included.
- Referral Bonuses and Rate-of-Pay Calculations
In the second example, an employer sought guidance from the DOL on the FLSA’s treatment of referral bonuses. The proposed incentive program in question would offer referral bonuses to all non-HR department employees who refer to a job candidate that is eventually hired.
Based on the key fact that participation in the referral program was fully voluntary, the DOL advises that such a bonus need not be considered in a rate-of-pay calculation. The bonus could be issued for an employee who successfully refers a job candidate to the company for hire without affecting the rate of their overtime compensation.
- Employer Contributions to Group Life insurance and Rate-of Pay Calculations
Finally, the legal representatives of a company wrote to the Department of Labor seeking guidance on contributions to a group life insurance plan. The question was whether or not imputed income in the form of contributions must be considered as part of an employee’s regular rate-of-pay. In reviewing the issue, the DOL clarifies that there is no FLSA requirement that employer contributions to group life insurance plans be considered when calculating overtime wages.
Get Help From a South Florida Wage and Hour Attorney Right Away
At Pike & Lustig, LLP, our Florida wage and hour lawyers have the training, experience, and knowledge to assist you with the full range of FLSA claims. If you have questions, our team will get you answers. Contact us now for a confidential initial consultation. With office locations in West Palm Beach and Miami, we serve employers and employees throughout the region.