WHD Opines on Regular Rate of Pay Issues

Vicki Lambert's Profile

The U.S. Department of Labor (DOL) has issued three new opinion letters that address compliance issues related to the Fair Labor Standards Act (FLSA).  As a reminder to my readers, an opinion letter is an official, written opinion by the DOL's Wage and Hour Division (WHD) on how a particular law applies in specific circumstances presented by the employer that requested the letter.  The current group of letters issued includes:

FLSA2020-3:

Addresses excludability of longevity payments from the regular rate of pay. This opinion rules that longevity payments made to employees that clearly "must or shall" be paid cannot be excluded and must be used to calculate the regular rate of pay.  However, if the longevity payment is worded as that it may or may not be awarded, up to the discretion of the employer, then it would not need to be included in the calculation for regular rate of pay.

FLSA2020-4:

Addresses excludability of referral bonuses from the regular rate of pay. The employer is offering a referral bonus to employees not involved in recruiting or human resources and would be issued in two parts, one immediately and one if the employee is still employed after a year and so is the employee who was referred.  The opinion states that the first portion of the bonus would not be included in the regular rate of pay calculations as it is not remuneration for employment as it is a voluntary program.  However, the second installment of the bonus would be included as it would be considered the same as a longevity bonus. If the employee received the bonus whether they were still employed or not, it would not be includable.

FLSA2020-5:

Addresses excludability of an employer's contributions to a group-term life insurance policy from the regular rate of pay.  In essence, the opinion states that just because a wage paid is subject to federal taxes under the Internal Revenue Code, does not make the same payment includable in the regular rate of pay.

For more information on opinion letters, see the WHD website