Per the DOL, Per Diem is to be taxable and included in the OT calculation if the employee ooes not incur any expense or costs for travel to job sites. Below is an example of how the calculation should work per the DOL. Currently we believe this will need to be a manual correction until the DOL and our Collective Bargaining unit can come to an agreement on forward action. Going forward we will need the ability to have two per diem types 'taxable per diem' and ' non-taxable per diem' depending on job location and employee address or, a check box within PR Employee to identity taxable or non. Also, with ability to include that per diem into the OT rates as explained below.
From online source WAGE & HOUR INSIGHTS - Department of Labor Press Release Highlights Heightened Scrutiny or "Per Diem" Payments
How Per Diems Affect the FLSA’s “Regular Rate” Calculation
As with many wage and hour situations, failing to account for per diem payments in the regular rate can add up quickly. To use an example from a recent case, take an employee making $15 per hour who receives a $50 daily per diem while working out of town ($250/week) and regularly works 50 hours per week (10 hours of overtime):
(50 hrs. × $15/hour) = $750 in straight time pay
($15 ÷ 2) × 10 overtime hours = $75 for the overtime premium
Without counting the per diem, you would pay the employee $825 per week.
However, if your employee never actually incurs any expenses or costs, or incurs far less than $250 per week, the DOL could treat the per diem as wages. The employee’s $15 per hour straight-time rate then becomes $20 per hour:
(50 hrs. × $15/hour) + ($250 per diem) = $1,000
($1,000 ÷ 50 hrs.) = $20 per hour
This means you owe the employee $100 each week in overtime premiums, not $75 (($20 ÷ 2) × 10 overtime hours = $100). Technically, since you didn’t pay the $250 per diem as wages, either, the DOL could lump that in as well, calculating that you should have paid your employee $1,100 each week, not $825. A $275 per week shortage adds up quickly: $14,300 per employee, per year…plus another $14,300 for liquidated damages…plus your employees’ attorney’s fees…plus civil fines from the DOL—all for our very simple example. That’s how the DOL can get to $3.5 million plus with just two employers.
Jessica Rindy
| Company | MN Limited LLC |
| Job Title / Role | Payroll Manager |
| I need it... | Yesterday...Come on already |
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Please make this happen now. We need it for compliance.
This is a DOL requirement and should be addressed immediately.