Bills would amend the FLSA

Overtime and minimum wage changes contemplated

Posted January 16, 2019

Even though Congress has quite a bit on their plate, members continue to look at amending employment laws such as the Fair Labor Standards Act (FLSA). Recently, a couple bills were introduced that would change the 81-year old law. One bill involves overtime calculations, and the other deals with the minimum wage.

Overtime

Under the FLSA employers must calculate and factor in earned bonuses (including bonuses paid and lodging provided) when determining an employee’s “regular rate of pay” for purposes of overtime compensation for each pay period. This means employers are to recalculate each employee’s rate of pay depending on different bonuses earned every month. Some employers choose to eliminate these incentives entirely because of the challenges in determining the changing rates of pay. Some would argue that this disincentivizes employees to innovate and produce results for their employers and, ultimately, their customers.

The Employee Bonus Protection Act (HR 488), introduced January 11, would amend the FLSA to provide that an employee’s regular pay rate, for purposes of calculating overtime compensation, would not be affected by additional payments to reward an employee or group of employees for meeting or exceeding productivity, quality, efficiency, or sales goals under a gain sharing, incentive bonus, commission, or performance contingent bonus plan.

Minimum wage

Currently, the FLSA requires that employers pay employees at least the minimum wage, which is $7.25. This wage is generally based on congressional or legislative action.

The Original Living Wage Act (HR 122), introduced January 3, would have the federal minimum wage, as a minimum, be adjusted every four years so that a person working for such a wage may earn an annual income that is not less than 25.5 percent higher than the federal poverty threshold for a family of four, as determined by the Bureau of the Census. The argument behind this is that the minimum wage should be set at a level high enough to allow two full-time minimum wage workers to earn an income above the national housing wage.

The Secretary of Labor would be required to publish such wage rate in the Federal Register not later than October 1 of each year. The minimum wage could go up, but it could not be adjusted down.

Both measures were referred to the House Committee on Education and Labor. This is the first step in the legislative process.

This article was written by Darlene M. Clabault, SHRM-CP, PHR, CLMS of J. J. Keller & Associates, Inc.


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