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In the Notice of Proposed Rulemaking, the Department proposed to amend 29 CFR parts 548 and 778, to clarify, update, and define basic rate and regular rate requirements under sections 7(e) and 7(g)(3) of the Fair Labor Standards Act.  The Department will develop a final rule based on public comments received.

Statement of Need:

The majority of 29 CFR part 778 was promulgated more than sixty years ago.  The Department believes that changes in the 21st century workplace are not reflected in its current regulatory framework. While the Department has periodically updated various sections of part 778 over the past several decades, they have not addressed the changes in compensation practices and relevant laws. The Department is interested in ensuring that its regulations provide appropriate guidance to employers offering these more modern forms of compensation and benefits regarding their inclusion in, or exclusion from, the regular rate. Clarifying this issue will ensure that employers have the flexibility to provide such compensation and benefits to their employees, thereby providing employers more flexibility in the compensation and benefits packages they offer to employees. Similarly, the Department believes that changes will facilitate compliance with the FLSA and lessen litigation regarding the regular rate. Additionally, the Department has not updated part 548 since 1967.

Summary of the Legal Basis:

Part 778 constitutes the official interpretation of the Department with respect to the meaning and application of the maximum hours and overtime compensation requirements contained in section 7 of the FLSA, 29 U.S.C. 207, including calculation of the regular rate. Additionally, part 548 sets out the requirements for authorized basic rates under section 7(g)(3) of the FLSA, 29 U.S.C. 207(g).

Alternatives:

Alternatives were developed in the NPRM.

Anticipated Costs and Benefits:

The Department prepared estimates of the anticipated costs and benefits associated with the proposed rule.

Risks:

This action does not affect public health, safety, or the environment.