This is the sixth and final installment from FirefighterOvertime.org on the regular rate.
Proper calculation of the regular rate is critical. All FLSA overtime must be at least time and one-half of the regular rate. The regular rate has been referred to as the “linchpin” of the FLSA. Not only is calculating the regular rate important, it can be difficult, especially for firefighters. Calculating the proper regular rate is frequently one of the most challenging administrative tasks for any fire department leader. In fact, the U.S. Supreme Court has written that calculating the regular rate can even be “perplexing” at times.
Properly calculating a firefighter’s regular rate may seem overwhelming at first, but with the proper knowledge, anybody can do it. Failing to include all remuneration in the regular rate is the leading cause of FLSA lawsuits in the fire service today. In this six-part series, we will explore which types of remuneration can be rightfully excluded from the regular rate.
Important Point to Remember
The regular rate must include “all remuneration for employment paid to, or on behalf of, the employee,” with only a few narrow exceptions. That means all the money an employee receives from his or her employer must be included in the regular rate unless it fits into one of these six narrow exceptions.
Regular Rate Exception #6 – Profit Sharing Exception
Does your organization provide profit sharing or stock option purchase programs to employees? If you are a public agency fire department; I think I can answer that question for you. Most likely, the answer is no. However, this regular rate exception could be very relevant for many firefighters or EMTs that work for private organizations providing fire or emergency medical services.
Money paid to an employee under a “bona fide profit sharing plan” or “any value or income derived from employer-provided grants or rights provided pursuant to a stock option, stock appreciation right, or bona fide employee stock purchase program” can be excluded from the regular rate of pay. The Department of Labor (DOL) has issued volumes of rules and requirements necessary to meet this regular rate exception. The requirements are far too involved to list here. These requirements can be found at 29 CFR Part 549.
This is sixth and final installment on the FLSA, Regular Rate, and Firefighters. In case you missed one, here they are again.