The Department of Labor (DOL) started off 2026 with a bang. On January 5, 2026, the Administrator of the DOL Wage and Hour Division issued six opinion letters covering a variety of topics related to the Fair Labor Standards Act (FLSA) and the Family Medical Leave Act. Among them was Opinion FLSA2026-2, which provided an important refresher on how to calculate overtime premiums due to nonexempt employees under the FLSA who work more than 40 hours in a week.
Section 7 of the FLSA requires employers to pay covered employees a premium rate of “not less than one and one-half times the regular rate at which [the employee is employed” for each hour in excess of forty hours worked in a workweek. 29 U.S.C. § 207(a)(1). Therefore, in order to determine an employee’s overtime premium pay, an employer must calculate the employee’s “regular rate,” which includes “all remuneration for employment paid to, or on behalf of, the employee” during a workweek, unless the payments fall within certain statutory exemptions. 29 U.S.C. § 207(e). As detailed in the Opinion letter, an employee’s regular rate is calculated by adding together all of the remuneration actually paid to the employee during a workweek (minus statutory exemptions) and dividing it by the actual hours worked during the workweek. Opinion FLSA2026-2 discusses one of the FLSA’s most prominent exemptions to payments included in the “regular rate,” often called the “discretionary bonus” exemption. 29 U.S.C. § 207(e)(3).
Opinion...
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