The DOL recently issued guidance clarifying that employer-sponsored COVID-19 incentive payments, such as hazard pay, must be included in the regular rate for calculating overtime payments.
Employers may compensate non-exempt employees in a variety of ways. The amount of overtime pay must be calculated using the employee’s regular rate of pay, which generally is calculated by dividing an employee’s total compensation for employment, less any statutory exclusions, by the total number of hours worked.
The FLSA provides an exhaustive list of payments that may be excluded from the regular rate of pay when calculating overtime payments. Recently, the DOL issued guidance clarifying that employer-paid incentive payments, including hazard pay for work performed during the COVID-19 emergency, do not meet any statutorily authorized exclusion and thus must be included in the regular rate used to compute employees’ overtime pay. This requirement applies both to private and state or local government employers who have opted to provide incentive payments to employees for working during the national health crisis.
Continue Reading DOL Issues Guidance that Employer-Sponsored COVID-19 Incentive Payments Must Be Included in the Regular Rate for Calculating Overtime Payments