Last week, SESCO issued an alert to clients that a proposed new overtime rule could affect fluctuating workweek employees.

According to SESCO, an NFDA Endorsed Provider, the U.S. Department of Labor has published a proposed rule that would clarify whether employers can pay bonuses and other premium compensation to employees who are paid on a fluctuating workweek basis.

The preamble to a 2011 DOL final rule stated that employee bonuses and other premium payments were incompatible with calculating overtime under the fluctuating workweek method of payment, according to SESCO. The new proposed rule reverses this directive from the DOL and expressly states that bonuses, premium payments and other additional pay of any kind are compatible with the fluctuating workweek method.

The DOL’s proposed rule explicitly states that “the [DOL] is making clear that employers and courts should not rely on the statement in the 2011 Preamble that “bonus and premium payments… are incompatible with the fluctuating workweek method of computing overtime…”

The DOL further clarified that these additional payments must be included in calculating the employee’s regular rate of pay when determining overtime rates. The DOL’s proposed rule was published November 5 and will be available for review and comment for 30 days.

This article originally appeared in the November 14, 2019, issue of the Memorial Business Journal.