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The U.S. Department of Labor’s Wage and Hour Division (WHD) has announced a final rule that allows employers to offer bonuses or other incentive-based pay to employees whose hours vary from week to week.

The rule revises the regulation for computing overtime compensation for salaried, non-exempt employees whose work hours vary each week (i.e., a fluctuating workweek) under the Fair Labor Standards Act (FLSA).

It also clarifies that bonuses, premium payments, commissions and hazard pay on top of fixed salaries are compatible with the fluctuating workweek method of compensation, and that employers must include supplemental payments when calculating the regular rate of pay as appropriate under the FLSA.

The final rule includes examples and minor revisions to make the rule easier to understand.

“This final rule offers another example of how the U.S. Department of Labor is working to reduce unnecessary regulatory burdens in order to benefit American workers,” said U.S. Secretary of Labor Eugene Scalia.

“Because of the clarity provided by this rule, employers will know they can pay workers’ bonuses in a broader range of circumstances. This rule comes at a time when millions of Americans are returning to work and will benefit from added flexibility in compensation.”

The Notice of Proposed Rulemaking was available for public comment for 30 days. The Department received approximately 36 comments on the proposal, all of which are available to the public at www.regulations.gov.   

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