When the US Department of Labor’s Wage and Hour Division published a Final Rule on the regular rate in late 2019, it gave employers the freedom to more easily offer perks and benefits to their employees without running afoul of federal wage and hour law. But while the Rule did clarify some issues, it left many employers’ questions unanswered. And this uncertainty has led to compliance challenges which have lingered to this day. In 2022 alone, in fact, the DOL published more than 25 press releases tied to regular rate violations that it investigated or litigated. As the New Year approaches and you plan your resolutions, we wanted to provide a top 10 list of steps you should consider taking to avoid the most common regular rate missteps.

What is the Regular Rate?

To begin any discussion regarding the regular rate, it is important to remember the basic wage and hour obligations under the FLSA.

• First, employers must pay non-exempt employees at least the minimum wage for all hours worked.
• Second, employees must be paid overtime for each hour worked over 40 in a workweek, and overtime must be paid at one and a half times the “regular rate of pay.”

Generally, most states’ regular rate analysis is similar to that of the FLSA. However, many are silent on the issue and a few have slightly different rules. Employers must remember to verify the state law where they have employees. Whatever methodology provides the most benefit to the employee – state or federal – is the one the...

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