New ruling frees prevailing wage employers to attract and incentivize better workers

2019 updates for prevailing wage and fringe benefits

 

CONTEXT
The fair labor standards act defines any hours worked in excess of 40 in a given week as “overtime.” It also dictates employees must be paid at least one and one-half their normal pay rate for all overtime hours. The Department of Labor refers to this pay as “regular rate.” Regular rate requirements define what forms of payment employers (including prevailing wage employers working under the Davis Bacon and Service Contract Acts) include or exclude in the time and one-half calculation.

WHAT CHANGED
The Department of Labor’s recent December ruling revises the list of which kinds of benefits, perks or bonuses may be included in computing the “regular rate.” A list of them is provided in the links below. The good news is according to the Department of Labor this update will “not impose any new requirements on employers or require any affirmative measures for regulated entities to come into compliance.” It does free employers to provide certain benefits they have previously refrained from providing because of fear around potential overtime pay consequences.

WHY NOW
This is the Department’s first significant revision in over 50 years. During that time compensation generally included wages, paid time off and basic health and welfare plans. Since then employee compensation has evolved to include wellness services, fitness classes, stress reduction programs. Additionally many employers have consolidated sick leave and vacation into paid time off plans. This ruling updates government policy to reflect the current employment landscape. The ruling is also driven by a booming economy with more jobs than workers. This frees employers to compete for workers through offering a wider range of perks, bonuses and benefits completely separate from hourly and overtime pay.

Additional Information available here:
https://www.dol.gov/agencies/whd/overtime/2019-regular-rate/faqs
https://www.dol.gov/newsroom/releases/whd/whd20191212-0

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