The U.S. Department of Labor (DOL) announced a Notice of Proposed Rulemaking that would amend the Fair Labor Standards Act’s regulations applicable to the fluctuating workweek method of compensation. The proposed rule is significant given that many employers will likely explore the use of the fluctuating workweek method of paying overtime-eligible employees in light of the new overtime rules that are scheduled to go into effect on January 1, 2020.
Specifically, the DOL proposes to revise its existing fluctuating workweek regulation to expressly state that any bonuses, premium payments, or other additional pay of any kind are compatible with the fluctuating workweek method of compensation, and that such payments must be included in the calculation of the regular rate unless they are excludable under other FLSA sections . The proposal also adds examples to the regulation to illustrate these principles where an employer pays an employee, in addition to a fixed salary, (1) a nightshift differential, or (2) a productivity bonus.
The proposed rule is open for public comment for 30 days and is expected to be implemented by Executive Order as a deregulatory action, meaning it could be effective at the time the new overtime rules are in place on January 1st.
Should you have any questions on this new proposed rule or any other employment or labor law matter, please contact us.