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Wage & Hour – Development & Highlights To Highlight Recent and Noteworthy Developments In Cases And Regulations on Wage and Hour Laws That Affect Large and Small Businesses

New Proposed Regulations Affect Overtime Issues

Posted in Exemptions

The federal regulations are always being updated, even if some of the revisions move at seemingly glacial speed.  Recently, the United States Department of Labor has proposed to revise regulations addressing the so-called tip credit, the use of the fluctuating work-week method of paying overtime and compensatory time off. 

The current tip credit allows an employer in the restaurant industry to pay only a cash wage of $2.13 per hour, with the assumption being that the employee will recoup the balance of the required minimum wage in tips.  If the employee is, however, a bad or discourteous waiter, and does not make up the difference in collected tips, the employer must then pay more of the minimum wage in pay.  The proposal would update the tip credit provision to reflect the increases in the federal minimum wage, which now is $6.55 per hour and in July 2009 will be $7.25 per hour.

Another proposal would affect the calculation of overtime when employees are on a fluctuating work week method of receiving any overtime.  The current regulation allows employers to pay overtime based upon the regular rate for the particular week for salaried non-exempt employees, after that rate is computed based upon the number of hours worked in that discrete week (and assuming an up-front agreement between employer and employee to do so)..  The new proposal sets forth that bonus or other premium payments will not invalidate a fluctuating work-week agreement, but must be included in ascertaining the regular rate for that week.

Another proposal addresses compensatory time usage.  Public employees are allowed to be granted and use compensatory time off in lieu of being paid overtime.  The proposal seeks to track judicial decisions that have addressed this issue by clarifying that the FLSA does not require a public agency to allow compensatory time to be used on a day specifically requested but only requires that the public agency allow the use of the time within a reasonable period unless such use would unduly impact the agency’s operations.

Comments are being accepted on the proposals until approximately mid-September.  These proposals might not draw as much attention or criticism, as the proposals to amend the white collar exemptions in 2003, but who knows.