On April 5, the U.S. Department of Labor (DOL) issued a set of final “cleanup” regulations, bringing the existing Fair Labor Standards Act (FLSA) regulations up to date with the technical changes and statutory enactments that have passed over the past few years. For example, the regulations, which took effect today, update figures and computations to reflect the updated federal minimum wage, which increased to $7.25 per hour in 2009.
Yet what is more interesting about these regulations, which were initially proposed in mid-2008, is what they chose not to do. Despite receiving numerous comments over the nearly three-year period during which these proposed regulations were up for review, the DOL simply chose to defer consideration of the more substantive matters that were addressed by the original regulations, reducing the 29-page ruling to little more than technical cleanup.
For example, a section of the 2008 proposed regulations would have modified the treatment of bonus/premium payments for nonexempt employees paid under the fluctuating workweek method, which allows employers to pay qualifying employees a fixed salary and then compensate them for any overtime at a reduced, half-time rate. The proposed regulatory changes would have allowed employers to also offer bonuses and other incentives to employees without invalidating the fixed-salary requirement of the fluctuating workweek method.
The DOL, after reviewing numerous comments from employer and employee representatives alike, chose to reject the proposed revisions, holding that they were inconsistent with the fixed-salary requirement for this basis of payment. Thus, the fluctuating workweek rules are unchanged, and employers that wish to pay nonexempt workers under this method of computation must continue to adhere to the requirement that the employee receive a fixed salary plus appropriate overtime.
Similarly, the DOL also chose not to adopt proposed regulations that would have clarified public employees’ right to take comp time on the date requested as well as regulations related to employer vehicle use and employer meal credits.
The regulations do provide some guidance to employers with tipped employees, including whether the requirement to “inform” tipped employees of the tip credit provisions must be done in writing. The DOL specified that employers are not required to provide this notice in writing; nonetheless, it’s good employer practice to do so since it can serve as documentation that the notice was in fact provided.
Employers should keep in mind that until finalized and effective, proposed regulations are not law, and even good-faith compliance with proposed regulations isn’t to be substituted for compliance with active, though perhaps outdated, legal requirements.
For more information on the cleanup regulations, see the cover article in the May 2011 issue of Federal Employment Law Insider.