Tag Archives: new FLSA regulations

Clarifying “Incentive Payments” Under the New FLSA Regulations

The new FLSA regulations went into effect on May 18, 2016. (see our previous article on the new regulations “It’s Here … The DOL’s New Overtime Rule is (Finally) Published”)

The new regulations increased the minimum salary threshold for the FLSA overtime exemption from $23,660 per year to $47,476 per year (or $913 per week).

Also, under the new regulations, employers will be permitted to use an employee’s non-discretionary bonuses and “incentive payments” (including commissions) to satisfy up to 10% of the new standard salary level — subject to certain restrictions.

While the term “incentive payment” is not defined in the new regulations, there are certain aspects of compensation that are clearly not considered “incentive pay”. Those items are those which the US Department of Labor has historically not allowed to be included in the calculation of the minimum salary amount, namely:

  • The value of medical, disability or life insurance or contributions to retirement plans or other fringe benefits, or
  • The value of board and lodging paid by an employer.

When determining whether an exempt employee’s salary is in compliance with the new overtime rules, employers may not consider the value of incidental benefits provided to the employee by the employer.