In the Biden Administration’s first opinion letter interpreting the Fair Labor Standards Act, the Wage and Hour Division discussed the effect of expense reimbursements on an employee’s regular pay rate for the employee’s overtime premium.
An oil and gas industry employer that reimburses its pipeline inspectors $25 per day for the use of their personal mobile phones, cameras, and computers asked WHD whether it could increase the reimbursements to $200 per day while excluding them from the inspectors’ regular pay rate. In a November 8 opinion letter (FLSA2024-01), WHD explained that the answer depends on whether the employees actually incur the expenses and whether the reimbursements are reasonable.
The opinion letter emphasizes that only the portion of the reimbursement that reasonably approximates the employee’s actual expenses can be excluded from the regular pay rate. WHD suggests that excluding the current $25 expense payment may be reasonable but that it would be unreasonable to exclude the employer’s proposed reimbursements of $200 per day because the facts do not indicate that the inspectors actually incur such high expenses.