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Handling Supplemental Pay under the FLSA

Handling Supplemental Pay under the FLSA is an essential knowledge for HR and Finance professionals alike. This is because supplemental pay is a major area that, if handled incorrectly, can land the organization in court. The federal rules relating to supplemental pay are contained in Title 29, Part 778 of the Code of Federal Regulations and enforced by the Wage and Hour Division of the U.S. Department of Labor (DoL).

An understanding of what supplemental pay is becomes necessary to know the ways of handling supplemental pay under the FLSA. In simple terms, any pay that is in excess of an employee’s regular pay is deemed as supplemental pay. Supplemental wages are defined in clear terms in the 2016 edition of IRS Publication 15, (Circular E), Employer's Tax Guide. The IRS has clear definitions of what constitutes supplemental pay. These are some of them:

  • Overtime pay
  • Accumulated sick leave
  • Awards
  • Back pay
  • Bonuses
  • Commissions
  • Expense allowances paid under a non-accountable plan
  • Nondeductible moving expenses
  • Prizes
  • Retroactive wage increases
  • Severance pay
  • The value of taxable fringe benefits

Understand supplemental pay first

Handling supplemental pay under the FLSA should proceed on an understanding of the differences between regular and supplemental wages. Why is this so? It is because regular pay is a State matter, meaning that different States have different tax rates and structures. An employee has to file a Form W-4, which is the basis on which the income is taxed. While this is the case with regular wages, supplemental wages are exempt from State wage laws, and the taxes under these wages are governed differently.

It is here that there is considerable confusion about handling supplemental pay under the FLSA. Because of this, employers are facing a huge number of lawsuits from employees who bring up these legal cases alleging that they are not being paid properly and legally for what they are entitled. Handling supplemental pay under the FLSA is thus critical, because these lawsuits cost employers millions of dollars annually. Unless there is clarity on handling supplemental pay under the FLSA; any employer is liable to face legal action under the FLSA.

Different rules governing how an employee has to be paid

Handling supplemental pay under the FLSA is important because it is complicated. There are different rules governing how an employee has to be paid when dressed in a certain fashion and when dressed in another. There are also different rules for whether to consider flying time as working hours and pay for them. Similarly, a breastfeeding woman or an employee who takes breaks at work is governed differently under the FLSA.

In view of the enormous expanse of the topic and the resultant confusion that could potentially arise as a result of not knowing the ways of handling supplemental pay under the FLSA; it is necessary to get trained to clarify on these grey areas.

A webinar on the subtleties of handling supplemental pay under the FLSA

TrainHR, a leading provider of professional trainings for the human resources industry, is organizing a webinar that seeks to offer clarity on the areas relating to handling supplemental pay under the FLSA.

At this webinar, the speaker, Michael D. Haberman, a consultant, speaker, writer and teacher, and co-founder of Omega HR Solutions, Inc., a consulting and services company, will explain the subtleties of handling supplemental pay under the FLSA. To get a thorough understanding of this topic, enroll for this webinar by logging on to http://bit.ly/2isUiJj .

Michael will cover the following areas at this session:

  • Understanding who is a covered employer
  • Understanding who is a covered employee
  • The basics of overtime
  • Handling shift-differentials
  • Dealing with On-call time
  • Handling meals and breaks
  • Why you have to pay for breastfeeding
  • Putting to bed the issues of sleeping breaks
  • Understanding commuting
  • When you have to pay employees for training and when you don't
  • Dealing with the difference between local travel and long-distance travel
  • Understanding how to deal with preparatory and concluding activities
  • The difference between Federal and State requirements
  • Recordkeeping requirements
  • Class action versus collective action lawsuits

https://www.dol.gov/whd/regs/compliance/WH1262.pdf  

https://justworks.com/blog/the-ins-and-outs-of-supplemental-wages-w...

 

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