New Final Rule from the US Department of Labor Fair Labor Standards Act

By: Angel Berberena, Esq.

December 13, 2019

The U.S. Department of Labor (U.S. DOL) recently announced a Final Rule (29 CFR Parts 548 and 778) updating regulations governing regular rate requirements under the Fair Labors Standards Act (FLSA) to provide clarity and better reflect the 21st-century workplace. This Rule aims to promote compliance with the FLSA, provide appropriate and updated guidance, and to encourage employers to provide additional and innovative benefits to workers without fear of costly litigation. In addition, the Final Rule defines what forms of payment employers may include and exclude in the FLSA's "time and one-half" calculation when determining overtime rates and clarifies other forms of compensation, including payment for meals periods and "call back" pay.

Previously, employers were uncertain about the role that perks and benefits played when calculating the regular rate of pay. This Final Rule clearly states which perks and benefits must be included in the regular rate of pay and which may be provided without including them in the regular rate of pay.

Specifically, the following perks and benefits may be provided without risk of additional overtime liability:

  • the cost of providing certain parking benefits, wellness programs, onsite specialist treatment, gym access and fitness classes, employee discounts on retail goods and services, certain tuition benefits (whether paid to an employee, an education provider, or a student-loan program), and adoption assistance;
  • payments for unused paid leave, including paid sick leave or paid time off;
  • payments of certain penalties required under state and local scheduling laws;
  • reimbursed expenses including cellphone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred "solely" for the employer's benefit; and clarifies that reimbursements that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System or the optional IRS substantiation amounts for travel expenses are per se "reasonable payments";
  • certain sign-on bonuses and certain longevity bonuses;
  • the cost of office coffee and snacks to employees as gifts;
  • discretionary bonuses, by clarifying that the label given a bonus does not determine whether it is discretionary and providing additional examples and;
  • contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.

The U.S. DOL estimates that these changes and clarifications will result in substantial savings, including reduced litigation costs. For employers in Puerto Rico, some of these provisions will need to be examined taking into consideration additional benefits provided under local law.

The Final rule will take effect 30 days after its publication in the Federal Register. The expected publication date is December 16, 2019.

Goldman Antonetti & Córdova, LLC stands ready to assist you and your business to adjust to Puerto Rico's regulatory and legal changes. If you need further assistance in this area, please contact any of the following members of our firm:

Angel Berberena 787.759.4143
Luis Antonetti 787.759-4111
Vicente Antonetti 787.759.4112
Romel Meléndez 787.759.4115
Luis Ortiz Abreu 787.759.4110
Howard Pravda 787.759.4101
Gabriel Quintero 787.759.4130
Jorge Rodíguez Micheo 787.759.4102
Javier Vazquez 787.759.4113

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