Dept. of Labor Issues Final Rule on Non-Exempt Salaried Workers

Last week, the U.S. Department of Labor’s Wage and Hour Division issued a final rule that explicitly allows employers to offer bonuses, commissions, and other incentive-based payments to non-exempt salaried workers whose work hours vary week to week. According to a press release issued by DOL, the rule will go into effect 60 days after it is published in the federal register.

You can view the full text of the final rule here. In addition to providing employers with certainty that they are able to offer bonuses to non-exempt workers with varying work schedules, the rule also specifies a calculation process for how these of supplemental payments fit into calculating an employee’s rate of pay for overtime purposes.

The ability of businesses to offer bonuses to non-exempt workers with fluctuating workweeks had been a source of debate in federal court over the past decade, with contradictory rulings leading many employers to stop offering bonuses to non-exempt salaried employees. This rule explicitly codifies a procedure for offering bonuses to non-exempt workers, which will hopefully benefit non-exempt workers and employers alike.

According to the text of the final rule, the Department is also taking this regulatory step in order to help employers more effectively develop flexible work schedules in the midst of the COVID-19 pandemic. The federal government says “this rule will make it easier for employers and employees to agree to unique scheduling arrangements while allowing employees to retain access to the bonuses and premiums they would otherwise earn.”

Please note that this rule does not inherently supersede other state and local wage and employment laws; WANADA encourages you to reach out to your legal counsel if you need clarification on how this new rule might impact your business’ specific operations.

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