Corporate Payroll Services

A final rule from the U.S. Department of Labor, effective January 15, 2020, will allow employers to more easily offer perks and benefits to their employees.

The previous regulatory landscape left employers uncertain about the role that perks and benefits play when calculating the regular rate of pay.  The new rule clarifies which perks and benefits must be included in the regular rate of pay, as well as which perks and benefits an employer may provide without including them in the regular rate of pay.

U.S. Labor Secretary Eugene Scalia said, “In a robust economy with a million more open jobs than job seekers, we must allow employers to offer perks and benefits that will attract talent for open jobs and compensate employees for their hard work.  This rule is an important step in that direction.”

“The regular rate final rule provides clarity that allows employers to provide more benefits to their employees without unknown overtime consequences or litigation,” said Cheryl M. Stanton, Administrator for the Department’s Wage and Hour Division.  “Allowing employers to offer more perks at work provides a positive path forward for employers and employees alike.”

Specifically, the final rule clarifies that employers may offer the following perks and benefits to employees without risk of additional overtime liability:

  • The cost of providing certain parking benefits, wellness programs, onsite specialist treatment, gym access, and fitness classes, employee discounts on retail goods and services, certain tuition benefits (whether paid to an employee, an education provider, or a student-loan program), and adoption assistance;
  • Payments for unused paid leave, including paid sick leave or paid time off;
  • Payments of certain penalties required under state and local scheduling laws;
  • Reimbursed expenses including cell phone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred “solely” for the employer’s benefit; and clarifies that reimbursements that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System or the optional IRS substantiation amounts for travel expenses are per se “reasonable payments“;
  • Certain sign-on bonuses and certain longevity bonuses;
  • The cost of office coffee and snacks to employees as gifts;
  • Discretionary bonuses, by clarifying that the label given a bonus does not determine whether it is discretionary and providing additional examples and;
  • Contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.


The final rule also includes additional clarification about other forms of compensation, including payment for meal periods and “call back” pay.  It can be viewed here and will take effect 30 days after its publication in the Federal Register.

More information about the final rule, including FAQs and a Fact Sheet, is available here.