Today’s burning question: Does a fire department have to factor in an item such as a clothing allowance when determining a firefighter’s hourly wage for overtime calculations?
Answer: Under certain circumstances some or all of a clothing allowance may be considered compensation and thus includable in calculating the employee’s “regular rate”. Regular rate is the hourly wage that employees receive when all remuneration (compensation paid for work) is factored in. Overtime is based upon regular rate times 1.5.
While the general rule is that all remuneration must be included when calculating regular rate, there are exceptions. One exception that applies here involves expense reimbursements.
Typically, when an employer reimburses an employee for expenses incurred, the reimbursement does not have to be included in the regular rate calculation. A problem arises when the reimbursement is not a dollar-for-dollar payment for the exact cost of expenses incurred – but rather is given as a stipend or allowance intended to cover estimated expenses. In such a case it is possible that some or all of the allowance may be considered remuneration.
To the extent a firefighter’s clothing allowance exceeds what is “reasonably approximate” for the costs to purchase, maintain, and launder required uniforms, the overage must be included in the regular rate. 29 CFR §778.217. Determining if a clothing allowance is “reasonably approximate” for the expenses incurred requires a detailed factual analysis.
The big concern is whether an employer is using an inflated clothing allowance as a means of providing additional compensation to employees. If a court determines that a clothing allowance exceeds what is reasonably approximate for expenses, the overage would have to be included in the regular rate calculation. In this regard, if a department provides uniforms and laundering services, plus provides employees with a clothing allowance, it is possible that the entire amount of the allowance would be includable.
Each case will turn on the specifics of the facts in each workplace.
By Bill Maccarone